The fallowing code snip is designed to take in a flat list of file paths (or similar data) and produce a hierarchy of tree nodes representing those file paths.

        /// <summary>
        /// Constructs a nested hierarchy of types from a flat list of source types.
        /// </summary>
        /// <typeparam name="TSource">The source type of the flat list that is to be converted.</typeparam>
        /// <typeparam name="TReturn">The type that will be returned.</typeparam>
        /// <typeparam name="TPart">The type of the art type.</typeparam>
        /// <param name="sourceItems">The source items to be converted.</param>
        /// <param name="getParts">A callback function that returns a array of <see cref="TPart"/>.</param>
        /// <param name="comparePart">The compare part callback.</param>
        /// <param name="getChildren">The get children callback.</param>
        /// <param name="addChild">The add child callback.</param>
        /// <param name="createItem">The create item callback.</param>
        /// <returns>Returns an collection of <see cref="TReturn"/> representing the hierarchy.</returns>
        /// <exception cref="Exception">A delegate callback throws an exception. </exception>
        private static IEnumerable<TReturn> ToHierarchy<TSource, TReturn, TPart>(
          IEnumerable<TSource> sourceItems,
        Func<TSource, TPart[]> getParts,
        Func<TReturn, TPart, bool> comparePart,
        Func<TReturn, IEnumerable<TReturn>> getChildren,
        Action<IEnumerable<TReturn>, TReturn> addChild,
        Func<TPart[], int, TSource, TReturn> createItem)
        {
            var treeModels = new List<TReturn>();
            foreach (var keyName in sourceItems)
            {
                IEnumerable<TReturn> items = treeModels;
                var parts = getParts(keyName);
                for (var partIndex = 0; partIndex < parts.Length; partIndex++)
                {
                    var node = items.FirstOrDefault(x => comparePart(x, parts[partIndex]));
                    if (node != null)
                    {
                        items = getChildren(node);
                        continue;
                    }

                    var model = createItem(parts, partIndex, keyName);
                    addChild(items, model);
                    items = getChildren(model);
                }
            }

            return treeModels;
        }

An example of how one could use the ToHierarchy method would be like this …

        var separator = new[] { Path.AltDirectorySeparatorChar.ToString(CultureInfo.InvariantCulture) };
        // paths varible could be something from Directory.GetDirectories method for example.
        var nodes = ToHierarchy<string, TreeViewNode, string>(
            paths.OrderBy(x => x),
            x => x.Split(separator, StringSplitOptions.RemoveEmptyEntries),
            (r, p) => string.CompareOrdinal(r.Name, p) == 0,
            r => r.Nodes,
            (r, c) => ((List<TreeViewNode>)r).Add(c),
            this.CreateTreeNode);

        private TreeViewNode CreateTreeNode(string[] parts, int index, string source)
        {
            var node = new TreeViewNode() { Name = parts[index] };
            node.Value = string.Join(Path.DirectorySeparatorChar.ToString(CultureInfo.InvariantCulture), parts, 0, index + 1);
            if (index == parts.Length - 1)
            {
                node.Name = Path.GetFileName(source);
            }

            node.IsFile = File.Exists(node.Value);
            return node;
        }

Where paths is a array of file paths from say Directory.GetFiles.