Strange phantom sub folders on my Western Digital 250 GB Blue Label SATA hard drive

I have an external hard drive enclosure with a Western Digital 250 GB Blue Label SATA hard drive. The enclosure has a USB interface. I have tried to use it with a Buffalo Link station (Gigabyte HS- DH500GL) as an extention hard drive. After plugging it in I went into the Link Station software and formatted it to XFS which is the default partition type (the Link Station and anything attached to it use linux type partitions). Once the drive is formatted it comes up as USBDisk1 (default name, not changeable). If I go into My Computer (Vista OS) and click on USBDisk1, the drive opens, but it shows multiple sub folders also named USBDisk1. Each of the multiple sub folders also has a USBDisk1 subfolder, and so on to infinity. If I try to delete these phantom sub folders, I am not permitted to do so. I have checked this hard drive numerous times and no problems are found. I can write to the hard drive and delete anything I write. These phantom sub-folders are not deletable. When the drive is empty (except for the phantom sub-folders) it shows 0 bytes used.  Is there some issue using this type of format on this drive that may cause this?

My Link Station drive is also formatted XFS and I have no problem with phantom subfolders on it. This is only happening on the drive connected to the usb port of the link station. The Link Station is like having a file server on the network. I know it is common to use unix based file servers on windows networks. My OS is Vista 64. I can’t be the only person who has ever experienced or reported this. Any Ideas? Anyone!