Version:           1.9.6 (using KDE 3.5.6, Kubuntu (edgy) 4:3.5.6-0ubuntu1~edgy1)
Compiler:          Target: i486-linux-gnu
OS:                Linux (i686) release 2.6.17-11-generic

I am using Ubuntu for both my mail server and client.  The server is Ubuntu Dapper, the client is Ubuntu Edgy with KDE 3.5.6 packages from the kubuntu repository.  I am attempting to create a subfolder in my IMAP mailbox on my server.  The server is using Dovecot for IMAP with Maildirs.  Evolution and Thunderbird both create subfolders with no problems and KMail can read and use these folders with no problems.  I can delete these folders from within KMail and they are deleted correctly.  It just will not create a new subfolder.  I can create a folder on the same level with the Inbox with no issues.  Just not a subfolder of the inbox or any other folder.  When I attempt to create the subfolder in KMail, it appears to work until I hit send/receive to actually commit the change.  I then get:
Error while uploading folder
Could not make the folder test on the server.
This could be because you do not have permission to do this, or because the folder is already present on the server; the error message from the server communication is here:
Could Not Create Folder
An attempt to create the requested folder failed.
Details of the request:
URL: (unknown)
Date and time: Monday 26 February 2007 01:04
Additional information: imap://rogerh@mail.wizardsonline.net:143/INBOX/test/
Possible causes:
Your access permissions may be inadequate to perform the requested operation on this resource.
The location where the folder was to be created may not exist.
A protocol error or incompatibility may have occurred.
Possible solutions:
Retry the request.
Check your access permissions on this resource.

Again, if I make the same change with Evolution or Thunderbird, they folder is created correctly.