Thanks re-installing totally to 'Documents' in Vista makes sense. Thankfully, Pegasus is not a huge byte-monster to add to the datastream for back up.

When I installed Pegasus 4.1 on my new Vista laptop, I added in a copy of my working mailbox, locating it in the 'Documents' filesystem, and fiddling about with the setting until I got it to work properly, as I had done exactly likewise with an XP laptop last year, and again last week, when I swapped my mailbox for my wife's on the XP machine. 
Pegasus username swops are easy enough to edit to get things working. The Vista job was a lot more fiddly because of User Account Control.  
I installed Pegasus as Vista Administrator and it worked fine in this and under my Vista username .... until I got fed up with being nagged by User Account Control and switched it off. It just ain't as straightforward as Linux Root usage.
At this point Pegasus would run, but nothing I did would let me see or use my Pegasus User mailbox. Suitably humiliated and fed up, I switched UAC back on, and said mailbox came 
back from limbo.
Anybody else had a similar experience, and have and effective workaround?

Yes, 'down'-grade to Windows XP.  I'm not kidding, if you could see my face you would know how serious I am.  Try again when Vista has matured a little more.

In the event you're stuck with Vista, the problem is likely related to some permissions issue.  You can try changing the 'Compatibility Mode' setting to 'Windows XP SP2'.  If that doesn't work, I suggest re-installing Pegasus into a location under your user-space (like 'Documents'), and move any/all email files/folders to that space as well.  If that doesn't work...see the first suggestion.