With the advances in technology and information flow, process  automation has become of crucial importance. Many tasks that required  manual attention can now be executed automatically with the help of  various software, and the built-in features of newer versions of Windows  OS. These may include archive extraction, moving files, execution of  certain programs etc.
Many software  that offer this kind of automation generally have limited customization  options in terms of the rules that they follow. How about a software  that offers unlimited, user-defined rules to be executed automatically  once changes occur in a directory? Psycho Folder does  exactly that.
It is a very light, free program that watches a  user-specified folder for changes, and applies the rules defined by the  user based of file extensions. If you have some knowledge of  command-line and XML, the possibilities with this program become  limitless.
Once you install Psycho Folder, it sits in the system  tray. You will have to specify the folder that you want monitored.
Here  comes the more technical part. As you can see in the screenshot above,  the software is monitoring the specified folder based on 3 rules. The  rules are contained in an XML  file, and the default installation contains three rules which dictate  the software to encode videos, categorize  downloaded files and unzip downloaded archives. However, you can  tweak the rules file to add any new ones that you like.
Locate the  rules file in the installation folder (the path where you installed  Psycho Folder), and open it for editing in Notepad.
Generally,  the 
Psycho Folder has  been tested to work with Windows 7.
Download  Psycho Folder
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