What did you see happening.

If there was activity.

Bring up the bookmarks side bar.

Collapse the three major bookmark files.

Expand the Bookmarks Menu folder

At the bottom look for for a new folder.

From your Firefox 4 (anything higher than 3.0.2) you could create a .json backup file, and restore that into your Firefox 5 and you would completely replace your exiting bookmarks and it goes very fast.

• Backing up and restoring bookmarks - Firefox - MozillaZine Knowledge Base
  http://kb.mozillazine.org/Backing_up_and_restoring_bookmarks_-_Firefox
• Export bookmarks - MozillaZine Knowledge Base
  http://kb.mozillazine.org/Export_bookmarks
• Import bookmarks - MozillaZine Knowledge Base
  http://kb.mozillazine.org/Import_bookmarks
• Sorting and rearranging bookmarks - Firefox - MozillaZine Knowledge Base
  http://kb.mozillazine.org/Sorting_and_rearranging_bookmarks_-_Firefox

Make sure that the file has a .html file extension.

Bookmarks > Show All Bookmarks > Import & Backup > Import HTML : "From File"

The Bookmarks.html file from firefox imports perfectly into IExplorer v7.0 (I don't know about v8.0 or 9.0). I then sent to file to firefox v5.0 ....brought updhow all bookmarks and manually moved to folders and files into the bookmarks menu.....then erased the box saying "from iexplorer. I find it ironic that I have to use IExplorer to fix Firefox which seem to have the worst system for bookmark manipulation in the the 31 years I have owned microcomputers ( I started with the Altos cpm machine in 1980). I think the firefox programmers need some old time beta testers that really know how to find all possible glitches in ease of operation and possible glitches in the way programs are operated. I am still looking for a direct way to solve this problem using firefox only but have spent almost 20 hours of frustrated failure.