1. Is there anyway to disable/remove the Create Folder button :
   Yes you can hide the Create Folder button and the ".." in the images list with the following JavaScript called when the Image Manager command is executed:
   
   
   

   <script type="text/javascript">

   function OnClientCommandExecuted(editor, args)

   {

   if(args.get_commandName()=="ImageManager")

   window.setTimeout(function()

   {

   var imageManager = window.frames['RadEditor1dialogOpenerImageManager'];

   var button =  imageManager.document.getElementById('dialogControl_ImageManager_FileLister1_CreateNewDirectory');

   button.style.display="none";

   elements = imageManager.document.getElementById('dialogControl_ImageManager_FileLister1_ItemsTable').childNodes[0].childNodes;

   for(var i=0; i<elements.length; i++)

   {

   if(elements[i].className=="folderup")

   {

   elements[i].style.display="none";

   }

   }

   },500);

   }

   </script>

   <telerik:RadEditor ID="RadEditor1"

   OnClientCommandExecuted="OnClientCommandExecuted"

   ImageManager-ViewPaths="~/Img"

   ImageManager-UploadPaths="~/Img"

   runat="server"

   Skin="Default">

   <Content>

   </Content>

   </telerik:RadEditor>

2. In regards to the skin problem - we logged this issue in our ToDo list and we will do our best to have it fixed as soon as possible.

I hope this helps.