A] Exclude and Include methods do not support full paths. They only accept paths and patterns relative to the basePath of the FileSet (in your case, relative to @C:\MyFolder"). So in your case to Exclude the "C:\MyFolder\Ignore" folder completely, just write:
var fs = new FileSet(@"C:\MyFolder");
B] the patterns follow the case sensitivity of the OS that your program runs on. So if you are on Windows systems, the patterns are not case-sensitive, whereas on Linux, Unix, OSX, iOS, etc the patterns are case sensitive.