I just realized that this is a user-to-user forum. I incorrectly expected that this was a support forum monitored by official support. I sent an email to their support... I got a response back within just 6 hours! The support person said he's looking into this issue now. It's weird, I don't any documentation or screenshots that even show this odd behavior. It doesn't seem like a "feature"... more like a bug when using Office365 email folders. I have to say, at least their support replied to me very quickly. Hopefully, they will provide some useful help to get this resolved; even if it means waiting for a fix for this in the next update.