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I found the answer!
The answer was "View all files" - when you enable the view all files, this exposes hidden WM2003SE files, and thus the "icon" for games folder is exposed, therefore opening the games folder in programs you will see the hidden icon file - which is the icon for the "games" folder.
Turning off the view all files option then re-hides the icon file.
Of course, this doesn't really explain why the file is linked to a dll that doesn't appear to exist in the OS.
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