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It was my understanding that the Church forbade the founding of new religious orders, only allowing for congregations. If this is correct can someone point me to a source?
I'm too tired and lazy to look it up, but if I'm not mistaken it was at the Fourth Council of the Lateran.
Yes but there have been numerous Orders formed since then with Church approval.
The Second Council of Lyons recognized the Franciscans, Dominicans, Carmelites, and Augustinians as the four greatest mendicant orders.  Perhaps in the Middle Ages, it was harder to form a new order, but I know of no such decree.

Even if such a decree did exist, it would be a disciplinary matter, and thus could be changed in the future (even if it was approved in an ecumenical council).  The Church has allowed a number of religious orders since the Middle Ages.  Wikipedia has a list of 307 approved orders...

if your new congregation/order follows the exact same rules of the original order then you call your new group "order"

example being a new congregation of fransicans if founded and they use the exact smae rule that the original fransicans used then they can call themselves "order"

i found this out on a blog (I think NLM) when those fransicans in Italy switched to using the extraordinary form exclusively.