I managed to create thousands of subfolders by copying an album.
The albums were as following:
myalbum/subalbum
I did:
copy myalbum -> subalbum
It created -> myalbum/subalbum/myalbum/subalbum/myalbum...
This created a PHP timeout of over 60 seconds (it was a catalog with only about 30 images) and the process seemed to kept on going even after PHP had stopped - I couldn't delete the subalbum with all it's contents, as the system said that the catalog is in use or something similar (runs on UNIX machine). I got it removed only by e-mailing the hosting provider.

So I think it would be necessary to check that the folder we are copying to isn't a subfolder of the folder we are making a copy of. Probably the same goes for moving an album.

Actually it is not possible to copy an album to itself. Are you sure you are running the latest release?

Ah yes, not the current release - 1.2.5, sorry if this is fixed in the newest release.

I did not copy the folder into itselt, but into a folder that is a subfolder of the copied folder.

Well, we don't release new version for no reason...;-)