Just an update on this experience.
This must have been just some kind of weird bug that happened. I ended up going into Windows Explorer and re-naming my folder. All I did was add an underline symbol to the end of the folder name.
Now....the folder and all subfolders show up in X2 Open dialog box.
I think this bug happened when I created the folder from the x2 "Save as" dialog box. Normally, I always had created my folders in Win Explorer before saving from X2.
This same thing happened with another project I just started. I saved the song to it's own folder beneath the main project folder. I went to open a song back up and.....the folder was not visable.
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Update since I started writing this....
I just renamed this new project's main folder and it starts showing up in X2 Open dialog box.
I rename it again....back to the original name....and it's now still visible. Interesting for sure...!