If the working folder is inherited, the rename will alter the current working folder and the rename will act as if you changed the working folder. This means that all the files in the selected folder will have their status changed to Unknown or Missing. If you specifies a working folder for the folder that is renamed, the working folder and the status of all the files in the folder will not change.
For example, if $/foo has a working folder specified as c:\foo, then $/foo/bar inherits c:\foo\bar as its working folder. If $/foo/bar is renamed to $/foo/barnone, its new working folder is c:\foo\barnone, and no files in $/foo/barnone exist, so their status is all Missing. However, if $/foo/bar already had a working folder of c:\someotherfolder, then renaming $/foo/bar has no effect on its working folder – it is still c:\someotherfolder and the files all retain their current status. Note this logic applies recursively to all folders below a rename, since they all could have different working folders after a rename