I'm experiencing exactly the same issue as Tom describes. Seems to be new behavior since the latest update.
Neil Enns confirmed this in another thread. You can evoke the Preview in
the Overlay Creator, there it should work.
Yes, this is a known issue in CS5 and 5.5. You can invoke folio preview from the Folio Builder panel instead and it will work fine. See http://forums.adobe.com/message/4399358#4399358 for my message about it.
Thank you Johannes, but as I said in my original post, the button in the Overlay Creator panel works ok.
But the issue remains, on every pc and Mac I have tested this on over here. (it works ok on Windows 7/CS6 though...).
Hopefully there will be a fix soon.
Sorry Tom for not reading all the content of your post ,-)