I guess I was a little cryptic, just like the MSKB article. This is how I understand it.
IE 5.x, IE 6 and Windows 98 Second Edition, Windows Millennium Edition, and Windows 2000 includes a new shell extension called FTP Folders. This extrnsion enables you to browse FTP sites in Windows Explorer or Internet Explorer using an Explorer-style folder-based interface. But this extension is only installed if you do a "Full" or "Typical" installation of IE.
With the inclusion of FTP Folders, there is now an option to "Enable Folder View for FTP Sites". Here's the confusing part. Selecting this option actually turns OFF the new FTP Folders extension and reverts to the older viewing method in IE 4. That is also why you do not see the option in IE when FTP Folders is not installed. There is no option, it is just the default folder view. If you would like to get the option [even if you choose the older IE4 folder view], pull down Tools > Windows Update and get the latest Service Pack and browser enhancements. Then you should have the option.
Hope that helps.
The Old Man