A colleague of mine works in an a department we'll call "DepartmentX" in a larger organization. Within other departments in the org they create a "DepartmentX" folder and share that to my colleage's box account.

My colleague now has several "DepartmentX" folders and cannot at a glance see where they are from.

In the initial view in Box and even on BoxDrive the "root" is polluted with other people's stuff and it is not possible to organize that into sub folders that are meaningful.

If a user tries to drag a shared-folder into a folder they created Box attempts to copy the folder with a warning about changing permissions. What was expected to happen is that rather than appearing at the top level of the account (all files) that user-organize folders would appear and the shared folder would be in a sub-folder and continue to be a reference to wherever it is actually hosted.

You might need to create the notion of a sharedAt folder as part of the shared-folder's data structure that says not only that it is shared to user X but that it is shared in a folder/collection within that user's box.

The model right now is to treat the initial view like the Operating system desktop and making everything created or that other people create appear in the same space and with the possibility of having the same name.

Whether a sharedAt solution is the right approach there needs to be a way of viewing what a user has access to that has some degree of organization, where shared content may be organized by who shared it to the user:

MyBox
MyContent
User/OrganizationX
DepartmentX (shared folder)
Shared file.docx
SomeFile.txt
UserY
DepartmentX (shared folder)
README.txt
UserZ
DepartmentX (shared folder)
Stuff.zip

The above structure is meant to show that if organized by who shared the data multiple folders with the same name are no longer an issue. This is especially important in an enterprise scenario.

You can do the single catch all folder if you provide for different views and who shared what is but one.

Since you already support tags, you could have a view that shows content grouped into tag-folders.

So the two views identified here are:
Sharing View
select all files owned by user as MyFiles union select all files shared to user group by owner

Tagged Content View
with tags as (select disticnt tags from files where owner is user or file file is shared to owner x) Select all files where tag in tags group by tag

I know it won't be that trivial database wise, but conceptually the point of tags is for being able to find content and a sharing view.

You could also do more of Apple's notion of "Smart Folders" where the folder is a "view" in the database sense that it is named search criteria that can be treated like a read-only folder. I think this is in part what others are calling collections, but if the search tech were expanded to allow results to be grouped into folders (at least in the display) by some property like owner or tag, then having the ability to name the search and save that as a view-folder would mean users could create criteri- based collections and have more meaningful ways to explore their content. BoxDrive could list the views much like FileExplorer has a "QuickAccess" section