Two Applications Folders. HELP!

Not sure how it came about (around the time of installing Lion unfortunately) but I have two application folders, one has named itself Applications (Original) and the other just Applications with the logo on the front of the folder.

Problem is that it has screwed up some of the apps.

Some will only run from the original folder, whilst new ones are created in the 'Applications' folder (with the logo) but things like the contacts are blank. Some will not delete out of this latter folder being 'required'. I would like to get them all combined back into one, but do not want to start creating aliases etc.

Anyone suggest a solution, as this is the first real problem I have had with this machine in over three years.

(iMac 2.8Ghz Intel Core 2 Duo 4Gb RAM Now regrettably running Lion 10.7.3)