Have you tried deleting it from the Hard Drive via the OS.
In this case you can't delete it - the publish service's underlying code does not allow it.
If you put nothing in it, it won't be created as a hard drive folder in the folder to which stuff is published, and it won't do any harm other than looking ugly.
Thanks for the responses. That's too bad. I already have 10 or so publish folders, so one extra one really clutters the screen and is pretty pointeless.
Is there a way to create a useable smart publish folder as the default instead of the standard publish folder?
I think it always picks up the name of the folder specified in the Export Location section. So if you tick Put in Subfolder, it picks up the name of that subfolder. Make it a better name than "untitled export" and it won't look quite as bad. But I agree it's pretty pointless.