My M3 Real has suddenly stopped recognising the NDS folder and comes up with the message 'directory does not exist'. The folder shows up in windows and in MyCard, so I'm not rly sure what's wrong with it...
Reformatting it did nothing at all... this is starting to bug me... I can't find a reason why it shouldn't recognise it. It also doesn't recognise the GBA folder either. I'm sure they are right, as the both read 'NDS' and 'GBA'
Have you tried clicking the change folder icon in the bottom left of the screen? Make sure it is pointing to the correct location. If not repoint to NDS folder. You need to remove any sub directorys from the NDS folder or it won't let you point to it.
Not sure how M3 remembers the folder you set, but i don't think it's on the SD card so formatiing the card wont reset the location.
Also rather than restoring all your data try recreating the system and nds folders and adding just a couple of roms.