These submenus behave just like the WarpCenter's do: clicking on an item will open the respective object, clicking on a folder title will open another submenu, clicking on a folder title with mouse button 2 will open the folder.
Note that this setting will not affect the folders which you have declared to be your "favorite" folders in the respective folder settings notebooks. In order to disable the folder content functions completely, you will have to disable all favorite folders also.
See the XFolder Online Reference for details.
This setting takes effect immediately.