SVN how to resolve “local add, incoming add upon update” on a *folder*?

Here is my scenario:

Assume we have an SVN repo with the following content: myfolder myfolder\file.txt

Now I create two checkouts of this repo, co1 and co2.

In co1 we modify file.txt. In co2 we:

• svn delete myfolder
• svn commit
• Create a new folder named myfolder
• svn add myfolder
• svn commit

Now if I attempt an update in co1 I get a tree conflict:

A  +  C myfolder >   local edit, incoming delete upon update
M  +    myfolder\file.txt

I want to keep myfolder and the modified file, so I resolve the tree conflict:

svn resolve --accept working folder

Now if I try to commit, I get "svn: Directory '/myfolder' is out of date". If I try to resolve this using svn up myfolder, I get a tree conflict again:

A  +  C folder >   local add, incoming add upon update
M  +    myfolder\file.txt

Okay, so we try svn resolve --accept working folder again. But we still can't commit, we get the same message that "svn: Directory '/myfolder' is out of date", if we do svn up myfolder, we get right back to the last tree conflict.

What is the correct procedure to resolve this type of conflict (when we wish to keep myfolder and its changes)?

EDIT: Windows cmd line script to illustrate:

rmdir /S /Q C:\svntest 
mkdir C:\svntest

cd C:\svntest

svnadmin create repo

svn co file:///c:/svntest/repo co1
svn co file:///c:/svntest/repo co2

cd co1
mkdir folder
echo content > folder\file.txt
svn add folder
svn commit folder -m ""

cd C:\svntest\co2
svn up

cd C:\svntest\co1
svn del folder
svn commit -m ""
mkdir folder
svn add folder
svn commit -m ""

cd C:\svntest\co2
echo changed_content > folder\file.txt
svn up
svn resolve --accept working folder
svn commit -m ""

svn up folder
svn resolve --accept working folder
svn commit -m ""

And here is the output of running that script (note the commit failures at the end):

C:\>rmdir /S /Q C:\svntest  

C:\>mkdir C:\svntest 

C:\>cd C:\svntest 

C:\svntest>svnadmin create repo 

C:\svntest>svn co file:///c:/svntest/repo co1 
Checked out revision 0.

C:\svntest>svn co file:///c:/svntest/repo co2 
Checked out revision 0.

C:\svntest>cd co1 

C:\svntest\co1>mkdir folder 

C:\svntest\co1>echo content  1>folder\file.txt 

C:\svntest\co1>svn add folder 
A         folder
A         folder\file.txt

C:\svntest\co1>svn commit folder -m "" 
Adding         folder
Adding         folder\file.txt
Transmitting file data .
Committed revision 1.

C:\svntest\co1>cd C:\svntest\co2 

C:\svntest\co2>svn up 
A    folder
A    folder\file.txt
Updated to revision 1.

C:\svntest\co2>cd C:\svntest\co1 

C:\svntest\co1>svn del folder 
D         folder\file.txt
D         folder

C:\svntest\co1>svn commit -m "" 
Deleting       folder

Committed revision 2.

C:\svntest\co1>mkdir folder 

C:\svntest\co1>svn add folder 
A         folder

C:\svntest\co1>svn commit -m "" 
Adding         folder

Committed revision 3.

C:\svntest\co1>cd C:\svntest\co2 

C:\svntest\co2>echo changed_content  1>folder\file.txt 

C:\svntest\co2>svn up 
C folder
At revision 3.
Summary of conflicts:
  Tree conflicts: 1

C:\svntest\co2>svn resolve --accept working folder 
Resolved conflicted state of 'folder'

C:\svntest\co2>svn commit -m "" 
Adding         folder
svn: Commit failed (details follow):
svn: Directory '/folder' is out of date

C:\svntest\co2>svn up folder 
   C folder
At revision 3.
Summary of conflicts:
  Tree conflicts: 1

C:\svntest\co2>svn resolve --accept working folder 
Resolved conflicted state of 'folder'

C:\svntest\co2>svn commit -m "" 
Adding         folder
svn: Commit failed (details follow):
svn: Directory '/folder' is out of date