Sorry we cannot reproduce this. Tested like this:
1) Added a folder d:\temp with two subfolders, albumA, albumB
2) From Windows Explorer, renamed albumB to albumC
3) Update Library, selected d:\temp to be updated. Checkmarked that remove unavailable files was checkmarked
After the operation was completed, the files from albumB were removed.
Please let us know which steps you performed.
To me it sounds like something might not be correct with your database, from what you described in this and your other reports.
I would suggest you to contact us at http://support.imploded.com for more detailed assistance which is not possible via the forum.
Closed due to lack of reproduction information. Please be sure to include proper reproduction information as mentioned in the forum rules: http://support.imploded.com/support/discussions/topics/9000021163