Hello there,
i’m here too after searching for the answer. The Obsidian help link here also doesn’t fold for me, so seem folding in general could be broken?
I have indented the intended text to be folded, and in some cases the text is getting wrapped in backticks so this is the indented text even though it shouldn't look like this.
I only noticed the behaviour in the last day or two. I have tried the various settings, with no joy.
I also tried a workaround using a <details> block, but you can’t wrap code blocks inside HTML in Obsidian it seems, I assume for security measures.
Any ideas on a workaround or fix would be great. I’m trying to create an Q & A for learning, and having the answer on display already defeats the object 
The Obsidian folding page (no dropdowns for me)
Here is a GIF using folding and showing the bug. It works in preview mode, but not in live mode. I even enabled the Legacy editor and it still doesn’t work
GIF of trying to use folding
