<p>When spliting a solution in to logical layers, when is it best to use a separate project over just grouping by a folder?</p>

I usually do a project for the GUI a project for the business logic a project for data access and a project for unit tests.
But sometimes it is prudent to have separation based upon services (if you are using a service oriented architecture) Such as Authentication, Sales, etc.
I guess the rule of thumb that I work off of is that if you can see it as a component that has a clear separation of concerns then a different project could be prudent. But I would think that folders versus projects could just be a preference or philosophy.
I personally feel that if reusable code is split into projects it is simpler to use other places than if it is just in folders.