Had this same issue on 24H2 fresh install, mentioned fix didn't work. For anyone looking for other fixes, unpinning 'pictures' from navigation quick pin side panel fixed the bug for some reason. Couldn't rearrange custom folders or drag and drop anything to quick pin between each other, only above the defaults of documents, pictures etc. noticing the odd quirk making me test the oddity until that worked.
*Rant - only for Microsoft to read:*
Just want to say that this is the worst Windows I've ever transitioned to all time and I've used everything since Win98se as a kid, even Vista was far superior for a fresh install experience. I don't know who this operating system is designed for outside of 70 year old grandmas and tablet users, which is fine if you want to default to what you think is best, but the options to customize things properly need to remain, not progressively get worse with each new Windows alienating and disgusting your users. If I didn't just build a $2K gaming PC as it's primary purpose, I would never use this garbage and I've been a Windows maxi my whole life.
You guys even removed small taskbar option that has always been in Windows, do you know how bad that is to use on a 1080p display, some silly tablet mode taking up an insane amount of screen space. Can't hide this ridiculous useless folder ribbon bar taking up so much space either, when you could always hide these things in previous Windows... who is even using that versus right click context menu with all the options there being much faster if not using the most commonly used shortcut keys everyone knows?
Tabs are the only nice idea and benefit I can find so far, everything else for the average user is a massive downgrade and headache vs Windows 10. I'm not picky only needing very basic options Windows has always had, and still managed to make me extremely frustrated and disgusted while also slowing down my productivity speed a noticeable amount.