I am unable to view My Favorites in my portal sidebar. Also, this is not present in the PeopleTools > Portal > Structure and Content.
Thanks for posting your question!
In demo environments, Permission List PTPT1000 has access to My Favorites folder. Hence check following.
§ Does your profile have access to PTPT1000 or similar permission list which has access to My Favorites folder?
§ Compare Portal Registry Structure EMPLOYEE.MYFAVORITES between your demo and target environment where access is not available.
This is caused by lack of permission to the folder.