I noticed that my IMAP account was having issues with my upgrade from Microsoft Outlook 2007 to Microsoft Outlook 2010. I was trying to delete emails and was receiving this error message.
Deleted items folder is unavailable
Below are the steps to fix this problem.
Launch Microsoft Outlook 2010.
Go up to File, click on Account Settings, and the select “Account Settings”.
Make sure your IMAP account is selected if you have multiple email accounts and click “Change.”
Click on “More Settings.”
Click on the “Deleted Items” tab, click on your Inbox, and make a new folder called “Deleted.”
Click “OK”, cancel, and close. Your finished. You can also do the same thing with the “Sent Items” folder.