The Windows.old folder is really a file. It is a "Copy" of your C drive before the upgrade. It was made for just the reason that you used it for. So you could find those files that you forgot to back up.
Is is also used by the system, if you have a major issue and have to remove the new OS, by using the Control Panel to uninstall the new OS, and this file (Windows.old) is used to restore your system to the older OS.