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Try creating a new identity and moving data from old identity to new identity and then rebuild new identity as mentioned.

Answers to your queries are as follows: 1. If I create sub folders in Outlook below the inbox then these folders will be replicated on the server. Any mail I move to these folders in Outlook will remain on the server. Yes, indeed the emails moved in IMAP folders below Inbox will be...

Have you tried rebuilding the database? https://support.microsoft.com/kb/2360509 Ensure you have enough space and memory on system. Depending upon database size, it might take time.