Take folder files, inside an SVN working copy, running in Linux. The folder was set to be ignored, with the commands:
svn propset svn:ignore * \'fil
So close.
I think you wanted
svn propset svn:ignore files .
if you execute this in the parent directory of the files directory, it'll be ignored. You won't see the effect until the parent is committed, though. And I'm pretty sure you can't ignore a directory that contains versioned files.
Finally, I always use propedit rather than propset, so I don't lose any current settings.