After upgrading my UNR install to 9.10 my system had two "favorites" menu items. The top one had some default applications and a few of the applications that were in my original favorites folder. The lower favorites was left with a few applications that I had made custom launchers for. I tried to use the main menu editor, but the the top level folder wasn't there and I couldn't hide the lower level folder. After a little fooling around, I found the solution.
First of all the new favorites folder is not contained in the Main Menu list. You can add launchers to it by right clicking them and then adding them to your favorites folder. This means that you need to have the applications launchers defined in some other menu before adding them to the new favorites menu. This this works fine, but you can not reorder them in the Main Menu editor. They simply show up in the order they were added, so you could remove and add launchers to achieve a desired order. (I'm sure there is config file somewhere, but I haven't dug into the issue that far.)
Now about that pesky second favorites menu. You simply need to remove/hide/uncheck any remaining launchers from that menu. Once the items are removed, you can hide the folder and it will no longer appear on the desktop. Keep in mind that if you simply add the launchers to the new favorites folder, you will not be able to edit them from the Main Menu editor. I recommend adding the launchers to an appropriate folder first (i.e., Programming, Games, Office, etc.). You can add them to your new favorites folder later.
I suspect the only those of us who created custom application launchers in our old favorites folder are affected because all of the other launcher were move to the new folder during upgrade. I don't think it's really a bug. It seems to be a minor difference in how the folder is handled in 9.10.
I hope this helps.