Your question is confusing...
VSS does not work at a "folder" level. It works a "volume" level.
You "snap" a volume and you will have a device path which you can "open" using the filesystem api (which will automatically mount the device volume with a filesystem) on a file by file or you can access the device directly (sector by sector).
It should be easy to backup all files on the snapped device volume (don't forget all of the file streams and ACL's for NTFS files), your problem will be restoring them... VSS will not help you on the restore. The main problem will be restoring a system volume, where you will need another OS to boot to like WinPE or DOS or something else. If your not worried about system volumes then restore can be easy.
If you backup the data in terms of sectors, then you get the added benefit that if you write a volume device driver for it (to look like a volume or HD) then windows will auto-load a filesystem driver for it. This gives you a free explorer application, this is what most sector based backup applications do. Also it gives them VM possibilities.
Even if you are doing simple file backups, it helps to understand filesystems (NTFS, FAT, etc) so that you know what you can/should backup and restore. Do you know what a NTFS reparse point is? How are you going to deal with it if you hit one during your backup? Do you know how windows actually boots and what files you need to backup and restore and "patch" to be able to have a chance at booting. On a restore, how best do you lay out the NTFS volume as not to affect NTFS performance on the restored volume? Are you going to support restoring system volumes to new hardware, what does that require you to do just to have a chance of working? The questions are endless.
System backup/restore is not easy, there are lots of edge cases (see some of the questions above) that you don't know about until you hit them.
Good luck on you project, I hope I haven't put you off too much, I'm just saying there is a lot of work to be able to deliver a backup application that most people have have no idea about.