>Had an problem at a client’s site where when you created a new layout page using the New->Welcome Page content type an error would display saying that “Pages is not a valid document library”.
Looking into the issue further, Layout pages within the library could be accessed properly and using Manage Site and Content you could copy files into the library.
One thing that I did notice is that the Modify Navigation link from Site Actions->Site Settings was greyed out.
First thing was to check the web’s Publishing Feature, the Standard feature was enabled but this had no effect.
The solution was to deactivate and then reactivate the web’s publishing feature.
The client has recently applied June 2009 cumulative update to the server farm the previous day, wondering if this caused the problem.
Thank you to Myryama for a helping hand! in finding a solution.