Good idea PaulW, I hadn't tried it on an XP machine, so put up a profile and this time I left most things at default settings and it works!

Turns out its the "Use fast folder listing" option that is the problem, without that turned on it works as expected, haven't played with it much further yet but the help does indicate that there are some aspects;

"Trade-off: when you use this option, Pegasus Mail will not be able to access any folder in a level of your folder tree that you have not explicitly opened (because it won't yet know that the folder exists)."

That might explain the issue so time to play a bit further I think, possibly accessing each folder first, before turning that option might be the way forward!

I have just installed Mercury/32 on a system that has been running LAN copies of PM for some time with the purpose of being able to use remote IMAP access to the accounts.

The install of Mercury has gone OK and those aspects seem fine.

Connecting via IMAP, on a new install of PM in Standalone mode, works OK, the folders appear new mail and existing mail within the top level structure is fine.

However as soon as I go to open an existing Folder (of folders) the oddities begin!
The entire top level structure appears replicated within the folder, including New Mail etc.  The actual contents of the folder are not however listed at all.  Opening the folder is also accompanied with random crashes of PM.  Reconnecting at the LAN level all the folders and structures are fine, so it appears to be a problem with the IMAP Client or Server itself.

I've checked that the IMAP config box for mixed folders is NOT checked in the profile.
I've checked and corrected any problems in any FOLder files *.pMM .
I've rebuilt the HIERARCH.PM file.

From the session logs on the server the PM Client crashes seem to be associated with;
17:17:47.625: >> quit<cr><lf>
17:17:47.625: << * BAD Malformed command or oversize literal.<cr><lf>
17:17:47.625: --- Connection closed normally at Wed Nov 27 17:17:47 2013. ---

The PM install is version 4.63 on WIn7x64 and Mercury/32 ver4.74 on a W2k3 machine.

I've searched the forum for anything similar and nothing seems to apply.
There is a screen capture of the problem here;


Any thoughts ??

I'm not certain what you have done, but try installing a new copy of Pegasus Mail on one workstation using a new location and a local mailbox, and then connect to the IMAP server.