How to reproduce:

1. Install folder plugin
2. Create a freestyle job with name "project"
3. create a folder with name "folder"
4. create a freestyle job in the folder with name "subproject" 
5. open configure page of "subproject" click on Advanced, enter in displayname "project"
6. leave the text field
   -> You get a warning that the name "project" is already in use as a name by a job although in the folder is no conflicting job
7. create a second job in the folder with name "p2"
8. try to set the displayname of that second job to "subproject"
   No warning is shown although there is a conflict