OL2002: You Cannot Use Hotmail to Create a Subfolder Under Another Folder

When you use Outlook 2002 with a Hotmail account and you right-click a Hotmail folder, click Copy <foldername>, and then click New to create a subfolder under a folder other than the Hotmail root folder, you may receive the following error message:

Microsoft has confirmed that this is a problem in the Microsoft products that are listed at the beginning of this article.

You cannot create a subfolder under a folder other than the Hotmail root folder using Outlook 2002.