A Google Reader user reports in Google Groups that folder management was previously an issue and that he was unable to change folders for any feed. Yesterday, Google acknowledged the problem, and about a half hour after that, Google said that they released a fix for the problem.
Yesterday, another bug was reported by the Google Reader Guide, and this one hasn't yet been fixed. Google reports that "the ability to add tags and the ability to add a subscription to a folder from your Settings page is currently broken." They're aware of the situation and will update the Google Groups thread when it is resolved.
Forum discussion continues at Google Groups (#1) and Google Groups (#2).
