I have a folder that was created by unzipping a folder from my
c:\users\<username>\downloads directory. The folder that was created is now not trusted, is there a way that I can trust this folder.
It is a local folder, not a mapped folder.
If you are talking about Vista's ability to "block" files, then just right-click on the file in question, go to Properties, then click Unblock.
To unblock a bunch of files, download and run streams with the -s option.
If you are opening the files in Office and it is telling you that the location isn't trusted, visit this page for instructions on adding trusted locations: