Hi My document dashlet calls below alfresco data webscript when you select favourites, so basically you need to extend this OOB script
/slingshot/doclib2/doclist/documents/node/alfresco/company/home?max=50&filter=favourites
You can check this webscript located at - tomcat\webapps\alfresco\WEB-INF\classes\alfresco\templates\webscripts\org\alfresco\slingshot\documentlibrary-v2
1)Check - its js file doclist.get.js
2)All queries are getting generated from - filters.lib.js
3)In filters.lib.js, check "favourites" case and modify query to include folders as per your requirement.
Hope it helps!