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In UW IMAP a folder is either a mailbox or a directory for mailboxes, not both.
This is currently not fully supported in SquirrelMail, and the following has been found to give the most sane behaviour:
# Select uw as your server type
# Change default folder prefix if needed
# Don't move folders into Trash
There's still some quirks, but the above helps avoid some of it.
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