Ok, here’s what you have to do.
First, a factory reset does not actually rest the HUB back to the way it was the day you got it. It only clears any data that may be stored in the flash memory (such as login names & passwords), it is only for the current firmware (it doesn’t rollback to the firmware that you had when you got the HUB). And it doesn’t do anything to the internal HDD, all your files (should) still be there after a factory rest.
The first thing that you need to do is to make the folder icons that you want. If you are using the Xzener icons, these are pngs, they don’t have white backgrounds, they are actually transparent, but the HUB will show them with white backgrounds. You have to use a photo editor like Photoshop or GIMP (freeware and what I use) to make the a background that you want (that’s 185 X 278), then download Xzener’s icon pack, open the png that you want with the photo editor, then copy it to your background and resize it to fit. Then save it as “fodler.jpg” to each folder you want it for.
Once you have done that, and you have all the folder icons you want it the folders that they belong, then go to the Theme folder on the HUB from your PC and backup all your themes to your PC. After you do that, then completely delete the entire wd.tv folder. Just deleting the Thumb folder will not fix your issue, only deleting the entrie wd.tv fodler will allow all the new folder.jpgs to show up.
Now go to your HUB and Clear the Media Library. Once it recompiles you should see your new folder icons. If it takes longer than about 30 mins to recompile, try this. Disconnect the HUB from your network, then unplug and replug the power cord in. If it stil is taking a really long time to recompile, then use a paper clip or something similar to push the rest button on the bottom.