diff --git a/.github/actions/spell-check/expect.txt b/.github/actions/spell-check/expect.txt
index cc620ed98f..94fb0a8903 100644
--- a/.github/actions/spell-check/expect.txt
+++ b/.github/actions/spell-check/expect.txt
@@ -742,7 +742,7 @@ IDD
 IDesktop
 IDirect
 idl
-IDLIST
+idlist
 IDOn
 IDR
 idx
diff --git a/installer/PowerToysSetup/PowerRename.wxs b/installer/PowerToysSetup/PowerRename.wxs
index 6239033894..56de970b29 100644
--- a/installer/PowerToysSetup/PowerRename.wxs
+++ b/installer/PowerToysSetup/PowerRename.wxs
@@ -28,6 +28,9 @@
         <RegistryKey Root="HKLM" Key="SOFTWARE\Classes\AllFileSystemObjects\ShellEx\ContextMenuHandlers\PowerRenameExt">
           <RegistryValue Type="string" Value="{0440049F-D1DC-4E46-B27B-98393D79486B}"/>
         </RegistryKey>
+        <RegistryKey Root="HKLM" Key="SOFTWARE\Classes\Directory\background\ShellEx\ContextMenuHandlers\PowerRenameExt">
+          <RegistryValue Type="string" Value="{0440049F-D1DC-4E46-B27B-98393D79486B}"/>
+        </RegistryKey>
 
       </Component>
     </DirectoryRef>
diff --git a/src/modules/powerrename/PowerRenameContextMenu/dllmain.cpp b/src/modules/powerrename/PowerRenameContextMenu/dllmain.cpp
index 6bc8b33ebb..028dc2c31b 100644
--- a/src/modules/powerrename/PowerRenameContextMenu/dllmain.cpp
+++ b/src/modules/powerrename/PowerRenameContextMenu/dllmain.cpp
@@ -93,12 +93,6 @@ public:
     {
         *cmdState = ECS_ENABLED;
 
-        // We've observed that it's possible that a null gets passed instead of an empty array. Just don't show the context menu in this case.
-        if (nullptr == selection) {
-            *cmdState = ECS_HIDDEN;
-            return S_OK;
-        }
-
         if (!CSettingsInstance().GetEnabled())
         {
             *cmdState = ECS_HIDDEN;
@@ -112,6 +106,12 @@ public:
             return S_OK;
         }
 
+        // When right clicking directory background, selection is empty. This prevents checking if there
+        // are renamable items, but internal PowerRename logic will prevent renaming non-renamable items anyway.
+        if (nullptr == selection) {
+            return S_OK;
+        }
+
         // Check if at least one of the selected items is actually renamable.
         if (!ShellItemArrayContainsRenamableItem(selection))
         {
diff --git a/src/modules/powerrename/dll/PowerRenameExt.cpp b/src/modules/powerrename/dll/PowerRenameExt.cpp
index b4012a1899..95b42089a4 100644
--- a/src/modules/powerrename/dll/PowerRenameExt.cpp
+++ b/src/modules/powerrename/dll/PowerRenameExt.cpp
@@ -46,14 +46,26 @@ HRESULT CPowerRenameMenu::s_CreateInstance(_In_opt_ IUnknown*, _In_ REFIID riid,
 }
 
 // IShellExtInit
-HRESULT CPowerRenameMenu::Initialize(_In_opt_ PCIDLIST_ABSOLUTE, _In_ IDataObject* pdtobj, HKEY)
+HRESULT CPowerRenameMenu::Initialize(_In_opt_ PCIDLIST_ABSOLUTE idlist, _In_ IDataObject* pdtobj, HKEY)
 {
     // Check if we have disabled ourselves
     if (!CSettingsInstance().GetEnabled())
         return E_FAIL;
 
     // Cache the data object to be used later
-    m_spdo = pdtobj;
+    if (idlist != NULL)
+    {
+        CComPtr<IShellItemArray> spsia;
+        if (SUCCEEDED(SHCreateShellItemArrayFromIDLists(1, &idlist, &spsia)) && spsia != NULL)
+        {
+            spsia->BindToHandler(NULL, BHID_DataObject, IID_IDataObject, reinterpret_cast<void**>(&m_spdo));
+        }
+    }
+    else
+    {
+        m_spdo = pdtobj;
+    }
+
     return S_OK;
 }
 
@@ -124,7 +136,7 @@ HRESULT CPowerRenameMenu::RunPowerRename(CMINVOKECOMMANDINFO* pici, IShellItemAr
     HRESULT hr = E_FAIL;
 
     if (CSettingsInstance().GetEnabled() &&
-        (IS_INTRESOURCE(pici->lpVerb)) &&
+        pici && (IS_INTRESOURCE(pici->lpVerb)) &&
         (LOWORD(pici->lpVerb) == 0))
     {
         Trace::Invoked();
@@ -163,14 +175,7 @@ HRESULT CPowerRenameMenu::RunPowerRename(CMINVOKECOMMANDINFO* pici, IShellItemAr
         startupInfo.cb = sizeof(STARTUPINFO);
         startupInfo.hStdInput = hReadPipe;
         startupInfo.dwFlags = STARTF_USESHOWWINDOW | STARTF_USESTDHANDLES;
-        if (pici)
-        {
-            startupInfo.wShowWindow = static_cast<WORD>(pici->nShow);
-        }
-        else
-        {
-            startupInfo.wShowWindow = SW_SHOWNORMAL;
-        }
+        startupInfo.wShowWindow = static_cast<WORD>(pici->nShow);
 
         PROCESS_INFORMATION processInformation;
 
@@ -201,15 +206,18 @@ HRESULT CPowerRenameMenu::RunPowerRename(CMINVOKECOMMANDINFO* pici, IShellItemAr
         // psiItemArray is NULL if called from InvokeCommand. This part is used for the MSI installer. It is not NULL if it is called from Invoke (MSIX).
         if (!psiItemArray)
         {
-            // Stream the input files
-            HDropIterator i(m_spdo);
-            for (i.First(); !i.IsDone(); i.Next())
+            if (m_spdo)
             {
-                CString fileName(i.CurrentItem());
-                // File name can't contain '?'
-                fileName.Append(_T("?"));
+                // Stream the input files
+                HDropIterator i(m_spdo);
+                for (i.First(); !i.IsDone(); i.Next())
+                {
+                    CString fileName(i.CurrentItem());
+                    // File name can't contain '?'
+                    fileName.Append(_T("?"));
 
-                writePipe.Write(fileName, fileName.GetLength() * sizeof(TCHAR));
+                    writePipe.Write(fileName, fileName.GetLength() * sizeof(TCHAR));
+                }
             }
         }
         else
diff --git a/src/modules/powerrename/lib/Helpers.cpp b/src/modules/powerrename/lib/Helpers.cpp
index 8ef61366b1..ecd823e4d7 100644
--- a/src/modules/powerrename/lib/Helpers.cpp
+++ b/src/modules/powerrename/lib/Helpers.cpp
@@ -551,7 +551,7 @@ bool DataObjectContainsRenamableItem(_In_ IUnknown* dataSource)
 {
     bool hasRenamable = false;
     CComPtr<IShellItemArray> spsia;
-    if (SUCCEEDED(GetShellItemArrayFromDataObject(dataSource, &spsia)))
+    if (dataSource && SUCCEEDED(GetShellItemArrayFromDataObject(dataSource, &spsia)))
     {
         CComPtr<IEnumShellItems> spesi;
         if (SUCCEEDED(spsia->EnumItems(&spesi)))