So, I finally tried 8.2.0b . My standard virtual folder (which is just the concatenation of three files) comes up with no messages in it. The three actual folder files have been loaded in to XEmacs, and are in VM mode, but have "Unrecognized folder type".
If I visit the real files directly, VM recognizes them (they're mmdf - well, two are mmdf and one is empty, but I tried removing the empty one, just in case). What gives? All the relevant code has been extensively re-written since I last looked at it, so it must be your fault, Uday;-)
