Joker,
I remember I read about this on the Arduino Forum. They have modded the preferences.txt file in version 18 to include something like build=application folder (not sure exactly how it is, but that is the idea). Since you have version 18 installed, your preferences.txt file was re-written by that version, but it wasn't replaced when you ran your old version. To fix this, find your preferences.txt file and delete it. Then run version 17 that will replace it with the correct one and you'll have your applet folder back in the project folder. You need to do this every time you run version 18 and then you want to go back to 17 or older.
In win7, my preferences.txt file is located in C:\Users\Gabi\AppData\Roaming\Arduino folder.