- create a new folder
- select the new folder
- press Delete button
- confirmation dialog is shown with the buttons "selected files" * , "tagged files", "cancel"
- click the cancel button
= selected folder is deleted!

* it should be selected items IMO, perhaps even "selected item(s)" / "tagged file(s)"
BTW Key shortcut is missing for "Cancel" button (the same as for Selected files / Tagged Files (S / T)).
XnView 1.96.1, Windows Vista SP1.