OK, further information about this: apparently NewBookComponentOfTypeInHierarchy only works with structured books. So I am able to do this:
#target framemaker
var book = app.ActiveBook;
var elemLoc = new ElementLoc (book.HighestLevelElement, null, 0);
var folder = book.NewBookComponentOfTypeInHierarchy ("Widget Guide", Constants.FV_BK_FOLDER, elemLoc);
However, you can add a folder to an unstructured book with the interface, so I am not sure why there is not a programatic way to do it with unstructured books. BTW, I found this information in the FrameScript documentation!
Rick