At least in 6 and 7, both UC and LC names do show up.  All of the UC names  come first, regardless of what the second letter of the name is. Poser capitalizes the first letter of all folders as seen in the Library, just to make things more confusing.

This test proves the point.... on the left is Poser's display,
on the right I used my good old Norton file commander
to display the folders in case-insensitive alphabetical order.

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