To find out what is going on, you'll have to view some hidden system files. From Windows Explorer, select Organize -> Folder and Search Options. On the View tab, select the option to show hidden files and uncheck the option to hide protected operating system files. Now, in the documents directory, right click on desktop.ini and select edit. Here is mine:
[.ShellClassInfo]
LocalizedResourceName=@%SystemRoot%\system32\shell32.dll,-21770
IconResource=%SystemRoot%\system32\imageres.dll,-112
IconFile=%SystemRoot%\system32\shell32.dll
IconIndex=-235
The LocalizedResourceName is what is making things interesting here. No matter what you call this directory, Explorer is going to display the LocalizedResourceName.