My (C#, .NET 3.5) application generates files and, in addition to raising events that can be caught and reacted to, I want to display the target folder to the user in a form
In order to handle renaming, deleting and make other customization you need to write your own file explorer. WebBrowser control is not suitable for your needs. It's just a wrapper over ActiveX component.
You should check this codeproject article. It contains an implementation of file explorer. There are few more samples of file browser:
one
two