-- Word and Notepad - Open/Save Dialog Boxes - can only Arrange as author, other options are greyed out (See Screenshot 1)
-- Ran gpupdate /force
-- Reset Folder Settings, in Control Panel, Folder Options
-- Restarted and Word Dialog Box now defaulted to Arrange by Folder, other options are greyed out (See Screenshot)
-- Reproduced the Issue in Excel, and Publisher and Wordpad (not sure if this is an OS or Office Issue)
-- Notepad uses a different File Open Dialog Box
Screenshot 1
Screenshot 2