I spent many hours on the Internet to find the solution for this, Finally I find solution in microsoft site, below link shows the perfect solution provided by Linda Yan in technet windows forums
http://social.technet.microsoft.com/Forums/windows/en-US/9ee6ecdf-5958-4af4-b640-c659ada57bc4/option-to-create-new-folder-on-desktop-is-missing
Please logoff or restart the machine after completion of steps
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