Are you trying to create it in private or shared? Either way just click on the folder you want the new folder to be in, ie “Private Forms” or “Shared Forms” or a subfolder of those, and the button should become clickable. If you have one of your forms highlighted/selected the new folder button will be disabled. You have to select an existing folder to create a new folder.
If you are trying to create a new folder in the library, that has to be done in the System Admin console in the Documents section.
Is there a way to create folders that can appear within the “Forms” tab of the limited users dashboard ? I know that access to forms can be managed with user and group permissions, but we need to be able to group forms within folders to provide a clean user experience. We will ultimately have a large number of forms to offer our staff, and being able to group by Departmental folders is very desirable.