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I am using version 24.2.0 of Thunderbird and version 1.1 of Color folders still does not work for me. The right click menu option is still greyed out.

Thanks for your review.
Color Folders is actually working on my TB 24.2.0 (Windows 64bit).
If you have Account Colors 6.10 installed, please try upgrading it to 6.11 or later.
If not, could you kindly do below steps and post the results here?
Open TB menu -> Tools -> Error Console (alternatively just press ctrl+shift+J)
Click "Filter" box on bottom left and type "colorfolders"
If any error/warning/message left displayed, please copy it and post it here.