Alternatively, is there a way to disable or hide the Favorites Folder?

I can only imagine that if you did not want the folder then you would have to delete all the entries from the folder. When it is empty, it does not show up. Unfortunately, in order to get it to show again, you would have to populate it.

I doubt that you could have the convenience of having it populated and to make it disappear to have it come back at will.

I was looking for a more programatic way to disable or hide the folder for all users on our network at work. Thanks though.

Yes, if you go to the View Tab, on the Navigation Pane button you can uncheck "Favorites" and it won't appear.

You might also see if starting Outlook with the /ResetNavPane switch helps with your problem. See if this helps - http://www.officeforlawyers.com/outlook/tsol.htm#CLS