When I create a folder named system in my home folder, or in /tmp (can't try other locations as I am not root, but owner confirmed same problem even on root), ls -a will not show it. Also tried /bin/ls -a, same deal. Otherwise the folder "works" fine, I can cd into it, pwd shows the right location and everything. I can even rename it to something else and ls will show it then. But if I rename it back to system, ls will not show it anymore. Please note even if I remove the folder completely, or create it in a location where it previously didn't exist, with "mkdir system", it will not be shown by ls unless I rename it to something else. "echo *" shows the system folder. dir behaves same as ls (doesn't show the folder). Other folders with different names work fine and show up.
Distro is CentOS 5.6. I have another box with CentOS 5.5 and I DO NOT have this issue there. I don't think it's distro-related. I do not have root access but owner confirmed the problem on root as well.
Info about mount point from /etc/mtab: /dev/mapper/VolGroup00-LogVol00 / ext3 rw 0 0