So Microsoft changed how outlook handles IMAP accounts in 2010. Basically if you try to delete a message it will give you an error. What you need to do is go into the account settings and select "More Settings". Choose the "Deleted Items" tab. Click the radio box next to "Mark Items for deletion but do no move them permanently" option. Click ok. De-select the test settings checkbox. If you try to test it will fail on send and the setting will not be changed! Click finish. It should work now.