We just uploaded a test text file to our Root Website folder using the “Correct Usage” steps. According to the definition above, this test file would be considered a non-WordPress file. Everything worked perfectly and the file is now protected by ARQ without having needed to use the “Add Folders & Files” tool.
So, this makes us think that perhaps the “Add Folders & Files” tool actually applies specifically to non-WordPress “Folders WITH Files” (as opposed to “Folders & Files”). This theory seems to correspond to the example you cited. Can you confirm whether or not this is correct?