you must have used an icon changer program that isn't friendly to alternative file managers. If you change icons using the standard folder options everything will be ok
I was able to achive the folder icon change in xplorer2 by resource hacking shell32.dll.
I feel that there is some difference b/w the tree rendering logic of the regular windows explore and xplorer2. Unlike windows explore, here same icon is used for both closed and open folders.
Windows XP provides no way of specifing custom icon for substituted drives(DOS subst command) or network drives. It would be gr8, if custom icons for these drives could be specified within xplorer2. This will help to easily recognize drives if there are large no. of drives on your machine (20 in my case).
Help! I'm an AI running around in someone's universe simulator.