I also had that folder. I couldn't delete it either so i just right clicked and went to properties and made it into a hidden folder so i don't have to look at it

There is a great deal of speculation on annoyances.org about what the directory is. Apparently, it shows up in a number of XP installations. Given the number of Asian sites that come up in Google, it seems to be a high point of discussion among them. Haven't a clue what it is for. Some think it is included as a possible area for Windows Image Acquisition to be compatible with Xerox for scanning abilities. Some think it is a conspiracy upon the part of Microsoft.
What seems to be problematic is that it is protected by the system. Some seem to have managed to delete it by going through the Console. You might try the command: DEL \\.\ drive letter :\ path \ file name to see if that will get rid of it. However, from what I read, it comes back the next time you start XP.
The same kind of thing showed up in W2K with frontpage though you could delete it and not have it return.
There seems to be no references to it in the registry.
 
To put it in the immortal (though plagiarized) words of the original Word tech team to keep the program from being pirated, "only the shadow knows."

The problem you are having is caused by windows file protection, executed by winlogon. Windows File Protection prevents system files and folders from being altered, and automatically copies a backup file if a system file is altered. The following URL at the end of this message should help. Please note that for windows2000 sp2 and windows xp you need to follow the steps at the bottom of the page for the registry hack to work. This will disable ALL file protection, not just the xerox folder and frontpage folder, so be carefull! It worked for me, but using the hex editor was a pain. I preferred winhex, as you can serach for the offset required and alter the values easily. Good luck! http//www.winguides.com/registry/display.php/790

I have those folders also and had the same experiences. I had another experience in deleting a folder, called RECYCLER, that is put up by a Trojan Horse called W32SPYBOT and also refused to delete. I learned that I could force a delete by right clicking on the Recycle Bin icon, choosing Properties, and turning off the features that cause a warning dialogue and that send a deleted folder to the Recycle Bin. With those off, I could delete RECYCLER (though it comes back). I don't intend to try it with xerox since I have no reason to think it's malicious but I thought the trick might be of interest. Of course you can turn the Recycle Bin back on again any time.

First to PoppaBare, the RECYCLER is the name of the recycle bin so you can't delete or get rid of it. I had to laugh when I read you wanted to delete it.
 
The xerox folder should be there and will cause no harm but most people have it in C:\Program Files\xerox\nwwia and not C:\xerox\nwwia.
 
That folder is used during logon by the imaging software in XP, as Microsoft licensed some of the tech from Xerox. The wia in the name of the folder named nwwia stands for "Windows Image Acquisition". I would just leave the folder alone as XP looks for it at logon.