He also taught us to pay careful attention to ancient tales, which contain deep secrets as well, even though those who relate them have lost the keys to understanding them. Not only have the keys been lost, but the very awareness that there is a lock to be opened, that the story contains a secret to be sought, has been lost as well.
This was brought in the name of Rabbi Nachman by Rabbi Natan, who wrote the introduction to Sefer Sipurei Ma'asiyot:
"Before he told the first story in this book he spoke up and said: In the story tales that the world tells, there are many hidden things and very lofty matters — but the stories have been spoiled because much is lacking from them and they are also mixed up, and they do not tell them according to the order, telling at the end what belongs in the beginning and vice-versa and so on. But really in the stories that the world tells there are very lofty concealed matters." (Hebrew, English).
Rabbi Natan did not explain why ever should folktales conceal sparks of Torah secrets in them in the first place, but noted prior to that that "so was [the custom] long ago in Yisrael, regarding redemption and regarding exchanging, that when they wanted to speak of the hidden things of God, they would talk in the manner of riddles and similes, and they clothed the hidden things of the Torah, the treasuries of the King, in many, many different clothes and garments, as it is conveyed after the tale of the King's Son and the Maid's Son, where Rabeinu z"l said then, that in the early days, when the friends would talk and speak Kabbalah, they would speak in such language, because until Rashbi they would not speak Kabbalah openly etc." (Hebrew, English)
Rabbi Nachman's explanation for why non-Jewish tales contain sparks was brought in Sichot Ha'Ran no. 52:
"It is written, “The whole earth is filled with His glory” (Isaiah 6:3). God’s glory cries out from all things. Even the stories of all nations ring with God’s glory. This is the meaning of the verse, “Let the nations tell of His glory” (Psalms 96:3). It is even reflected in their tales. [...]"
For more info on Rabbi Nachman's views of the importance of non-Jewish tales, I recommend this essay (in Hebrew) by Ariel Schwartz which gives a good rundown of the subject.
And what of the idea of giving credence to old folk tales such as Cinderella or Sleeping Beauty? Do we really believe they contain “sparks of Judaism,” as if, in them?
Evidently Rabbi Nachman thought so, though to find those sparks, preliminary research into the original, true form of the tale was necessary, as well as being very familiar with Kabbalistic terminology. I don't know if everyone thinks so, but Rabbi Nachman's position is very much in line with the general Chassidic position of borrowing cultural materials from non-Jews and "kosherizing" them. Take, for example, niggunim such as Hupp Cossack and Niggun Shamil.