Unable to rotate images in thumbnail or filmstrip view

Symptoms

When you open a pictures folder (in thumbnail or in filmstrip view), one of the following behavior may occur when you select the Rotate Clockwise or the Rotate Counter Clockwise context menu items:

• Nothing happens, or
• The image is rotated correctly, but the following warning screen is not displayed prior to rotating the image:

Resolution

This happens if you've chosen the In the future, do not show me this dialog box and clicked the Yes / No button earlier. However, there is no option provided by the user interface to revert the setting back.
Here is an undocumented way to fix the problem. Follow the steps below:
Preview a picture using Windows Picture and Fax Viewer. Then press and hold the CTRL key, and then close Windows Picture and Fax Viewer window (by pressing the [X] button in the top right corner). You'll then see the following message:
Any rotation warnings that you may have suppressed have been reset, and may appear again when you rotate a picture.
Click OK. The Rotate functionality is now restored back.