This is a response to an older post (thread is now closed), back in 2004, but that post the first result from Google for this problem. Since I had to find a solution for that problem today, I thought it might be relevant to post an update in case someone else can use it.

I was able to get the current folder name in a variable using the following commands:

for /F "delims=\" %%I in ("%CD%") do set e=%%~nI
echo.FolderName: %e%

This works for me in Windows XP even if the full path contains spaces.