In reply to your comment...
The graph that you are running is based on test instances. Test instances are the tests that are added to the test sets. The test instances do not contain information on what test set folder they are located in. The test sets contain the information on what folder the test instance is in.
The reason that you are getting the context filter error is because there are no test instances under a test folder they are located in the test sets and that is why when you select the test set the graph generates correctly.
The test sets and test folders themselves to do not store a status so you cannot create a progress graph based on those.
As far as the content filter error, the content filter is set within the graph which is stored under the Analysis View on the Analysis Menu tab. To get rid of that error you could go into the graph, set the filter state to custom, click the add filter icon, select the Cross Filter tab, and define the test set folder that you want to pull in information from. The problem with this is that this will no longer be a dynamic graph and will only report on that directory unless the filter is changed.
I do not see any way that you could generate the progress graph based off of the folder selected.