I have tried fixing the N001 folder, in my program files, by using my backup, as well as using a downloaded backup from here. Am I missing a step somewhere?
I'm a bit unclear on what exactly goes wrong, though. It doesn't regenerate in your My Documents folder when you delete the neighbourhood folder/Sims 2 folder, correct? But have you tried simply copying the N001 folder from Program Files to My Documents, load the game and see if it works? That's all the game does too when it regenerates - it just copies the files.
'Cause it could be that it's just whatever function that copies N001 isn't working as it should, and that there's nothing wrong with the neighbourhood itself.