[Dovecot] Does dovecot support subfolders in Outlook (and in general)

[AWC Maillists]

Ok,
I am playing around with dovecot and things are running relatively 
smoothly.  I am using Outlook as that is what the client uses for 
Email.  I can copy messages to and from the IMAP folder.  I can create 
folders from the root directory fine.

My question is this. 
I have folders like this:

IMAPServer
--Inbox
--Trash
--WorkToDo

Now when I try and create a subfolder in "WordToDo" I get an error 
message "Unable to create the folder. The server responded:  'Mailbox 
doesn't allow inferior mailboxes'
When I try to create a subfolder in "Inbox" I get an error message 
"Unable to create the folder.  The folder 'Inbox' cannot contains 
subfolders..."

So is this a limitation of Dovecot?   Another problem with Outlook?  Or 
do I have some configuration problem on my end? 

Thanks.

--- Charles
PS:  My first impressions of dovecot are very positive.  It is a much 
cleaner and, so far, easier to handle IMAP server than the heavyweight 
UW & Cyrus IMAP servers.  Congrats on a impressive program.