You can create new folders ussing Contribute itself. Bring the Contribute Remote File Browser dialog using the menu item View--> Choose File or Blog Entry... and create/delete folders in the server.
Also you can publish files directly to the site using menu item File--> Publish File from My Computer...
That's the problem, the "Choose File or Blog Entry" is NOT a selectable option. I can see it as light gray text - but again, not selectable. What's the problem?
Whether the Choose button the toolabar is enabled?
Or please try clearing the Contribute preferences, refer to http://blogs.adobe.com/contribute/2011/11/launch-contribute-freshly-by-deleting-preference s.html