Beta version with a partial workaround:
https://www.dbpoweramp.com/beta/DMC-beta-2023-02-10.dmg
Dragging the folder will now select it even if it's not otherwise recognized by the app - will add a new entry at the bottom of the folder tree for such.
New menu command added: Batch Convert Select Folder - same effect as drag&drop.
There's some weird cause of this that I haven't yet identified, possibly folder incorrectly flagged as a package. In the next update I will add tweaking options for Batch Converter to work around this (show/hide packages, specify favourite folders to always show on top).