Hey, I finally figured this one out. What a PIA it is to close all folders. On a Mac, Option + Click top-level folder. I assume it's Alt on a PC.
Note, this works to close all folder. If I try Option + Click to open all folder, Dreamweaver crashes. I only tried this on a shopping cart site which has hundreds of folders. Maybe it was too much, or maybe DW could have completed it, but I got tired of waiting and force quite after about a minute.