new folder not empty when created

Give this a try: boot into Safe Mode according to How to use safe mode on your Mac and test to see if the problem persists. Reboot normally and test again.

NOTE 1: Safe Mode boot can take up to 3 - 5 minutes as it's doing the following; 

• Verifies your startup disk and attempts to repair directory issues, if needed

• Loads only required kernel extensions (prevents 3rd party kernel/extensions from loading)

• Prevents Startup Items and Login Items from opening automatically

• Disables user-installed fonts 

• Deletes font caches, kernel cache, and other system cache files

NOTE 2: if you have a wireless keyboard with rechargeable batteries connect it with its charging cable before booting into Safe Mode. This makes it act as a wired keyboard as will insure a successful boot into Safe Mode.

It sound like you might be holding down the Command + R keys instead of just the Shift key.That will get you booted into the Recovery volume where you will see this:

Make sure you hold down the SHIFT key before pressing the Power button and hold it down until the progress bar begins.

Also if you have a wireless keyboard connect it with its charging cable before trying

Hi Phensic57,

We'll be glad to assist with your folder issue. To start, make sure you're creating the folder using the steps outlined here: Organize files in folders on Mac

"Create a folder

1. On your Mac, click the Finder icon  in the Dock to open a Finder window, then navigate to where you want to create the folder.
2. Alternatively, click the desktop if you want to create the folder on the desktop.
3. Choose File > New Folder, or press Shift-Command-N.
4. If the New Folder command is dimmed, you can’t create a folder in the current location.
5. Enter a name for the folder, then press Return.

"

If you're doing that, and still running into the issue you've described, reach out to Apple to look into this with you further and help resolve your issue: Get Support

We hope this helps you out.

Cheers.

When you successfully boot into Safe Mode you'll get the login window with both the user name field and the password field.

In the upper right hand corner you'll see this:

You'll also get the system default wallpaper for the login. Is it not ugly only if you love pink (believe this was the Monterey wallpaper)

When you log in you'll get your normal desktop picture and Desktop.