branching WC folder fails with files marked as deleted

Hi

A user (I will call him user-A) of ours encountered the following issue
with our SVN environment:
- SVN server: 1.5.2
- SVN client: TortoiseSVN 1.6.16 (svn 1.6.17)

- user-A checked out the folder '_mt' with a number of file
- user-A then worked with the IDE which only handles (updates, deletes,
checks out etc.) the files in the folder but not the folder itself (the IDE
uses the SCC2SVN client PushOk).
- Meanwhile user-B created a new file in the '_mt' folder in the repo,
user-A checked out/updated to his WC.
- Later user-B deleted the file again in the repo, which user-A updated
into his WC. The created and deleted file(s) where added to the user-A's WC
entries file and marked as "deleted". In the user-A WC this file was
deleted as one would expect.
- Now the user-A needs to branch his WC and gets the following error
message on commit
(the file shown in the error message is the one that was created and later
deleted):

- Updating the '_mt' folder with the setting --depth empty did remove all
the files from the '_mt' folder and was therefore no help.
- Generally updating the the WC folder is unwanted, since user-A needed to
branch the current state of his WC.

- Here is what I did (which is an evil hack):

I remove all file entries in the .svn/entries file that where marked
"deleted" (thanks to still using a 1.6.x client), and the branch could be
created.

I would consider this a bug. Why does the client not simply ignore deleted
marked file entries? I also assume that this is not a TotroiseSVN bug but a
general svn bug.
I further assume that if it is a bug the 1.6.x series is no longer
maintained and a bugfix in 1.6.x rather unrealistic (unless I do it
myself)?
Is this bug known in 1.7.x too and has it been solved?
Updating to 1.7.x is not really wished but if that is the only solution to
it we probably will have to do.

Does anyone know that bug? Can anyone make a statement.

Thanks

Roman