VBA: Shell.Application Namespace function fails dependent on variable declaration in calling sub

I have encountered a situation where the Shell.Application object's Namespace method appears to fail dependent on the absence of a variable declaration in the calling sub.

A simplified test case is below:

Function TestShellApplicationNamespace(folder)

Dim oShell: Set oShell = CreateObject("Shell.Application")
Dim oDir: Set oDir = oShell.Namespace(folder)

Debug.Print TypeName(folder)

If oDir Is Nothing Then
    Debug.Print "oDir is Nothing"
Else
    Debug.Print "oDir is not Nothing"
End If

End Function

Which is called by:

Sub CallTestShellApplicationNamespace()

Dim folder As String

folder = "C:\"

TestShellApplicationNamespace folder

folder2 = "C:\"

TestShellApplicationNamespace folder2

End Sub

The results I get from running this are:

String
oDir is Nothing
String
oDir is not Nothing

I'm unsure whether this is a bug in the VBA interpreter, or something I'm doing wrong.

EDIT: After submitting this, also found the following which is of relevance (although not exactly the same)

Excel VBA Shell.Namespace returns Nothing

Shell interface oddness, it wants the parameter passed by value so change the function prototype to:

Function TestShellApplicationNamespace(ByVal folder As Variant)

(Or call with extra parentheses)

TestShellApplicationNamespace (folder)
ret = TestShellApplicationNamespace((folder))

You should really configure the IDE to not run code with undeclared variables at all.