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You can't share and edit .folio files. Instead, you need to send the source files to the other designer, and that designer needs to relink to (or re-create) the articles in the folio. Make sure that you include all the overlay files. The recipient should check overlays to make sure they're still connected in the Overlays panel. A yellow triangle appears in the panel if an overlay is disconnected.
Thanks Bob, to further clear up, The "other" designer would need to create a NEW folio thru Folio Builder using my assets and XML sidecar data? Then when he is done, give me back all the (source files) assets plus the newly designed Artciles (with source files) and then ingest these back into my original .folio?
Yes. Either re-create the folio using the import multiple/sidecar.xml method, or use the Relink option in the panel.
Again, the key is to make sure that all the file are transferred properly and overlay assets relinked if necessary. In ID CS6, there is better support for packaging and linking overlay assets.
May I suggest putting everything into a Dropbox folder and sharing that. This will ensure that both of you have the same assests.
When the other person is done, you can simply relink the articles with no need to transfer files back and forth.
And yes, I know for a fact this works since I do it myself.