Time machine question, file missing

[myuserid08]

I setup time machine on Thursday, created a folder on my desktop on friday. Folder was deleted by mistake today. Went over to time machine to find and restore the folder and its not there. All there is for Thursday and Friday is a daily backup.
I know the folder had been backed up as I checked. Its a 160gb external drive, time machine has used around 60gb.
Not much good if it overwrites files within a day or two!

[DJAKO]

Time Machine will only overwrite your files when the external HD is already filled up with backups. It will then start with the oldest files and overwrite those.

Not sure why a new folder in your case was overwritten. Are you sure you went back far enough in the day? Since daily backups are broken down into hourly sections

[myuserid08]

Well it does the hourly backups but once they are a few days old it seems to combine those into one backup if that makes sense.
Is there a way to take a screen shot so I can show you?