Good modification!
But here are some notes and bug.
1. After you made a search a bug appears.
There are two down arrows appeare

after phrase:
Search Results In Folder: Inbox 
And after phrase
Private Messages in Folder: Inbox the down arrow disappear.
Better to see screenshots:
Attachment 65638
Attachment 65639
P.S. This is a clean install of 3.6.7 PL1
The Fix for this is to change this code from
ReadMe.txt:
Code:
$vbphrase[search_results_in_folder]<span class="normal">: <span id="nav_pmfolders.messagelist">$foldername<script type="text/javascript"> vbmenu_register("nav_pmfolders.messagelist"); </script></span></span>
To this one:
Code:
$vbphrase[search_results_in_folder]<span class="normal">: $foldername</span>
2. A littile note.
Why you didn't include templates modification in MOD file, so we have no need to edit template. Just Install.
As I looked throw I think it can be done so.
For example you can take a look how it works in this mod:
https://vborg.vbsupport.ru/showthread.php?t=122592
And once again Thanks for you work!