[Dovecot] namespace trouble

[Kevin Faulkner]

I am having some trouble with dovecot 1.2.12 and some namespace issues, or at 
least that's what I think is the issue. I setup a virtual mailhosting using 
mysql and postfix. I can receive email and send email without a problem, but 
when I use mutt to sign in to dovecot, I can't list any Folders, it see's 
INBOX but it doesn't see any mail. I generally try to not post my problems 
online, but I searched around on the Internet and I couldn't find anything 
similar to this issue.
I also used kmail to connect to the and it is able to see the mail, but when I 
can't create any folders.
mutt connecting option:
mutt set spoolfile=imaps://server.here/INBOX."

Here is the mutt debug (mutt -d 3)
4< a0001 OK Capability completed.
4< * LIST (\Noselect) "." ""
4< a0002 OK List completed.
4> a0003 STATUS "Drafts" (MESSAGES)
a0004 SELECT "INBOX"
4< a0003 NO Unknown namespace.
4< * FLAGS (\Answered \Flagged \Deleted \Seen \Draft)

dovecot.conf (part of it, tell me if you want more)
mail_location = maildir:/home/vmail/%d/%n/Maildir
log_path = /var/log/dovecot.log
namespace private {
  separator = .
  prefix = INBOX.
  inbox = yes
  hidden = no
  list = yes
}
listen = *
protocol imap {
}
protocol pop3 {
}
protocol lda {
    log_path = /home/vmail/dovecot-deliver.log
    auth_socket_path = /var/run/dovecot/auth-master
    postmaster_address = postmaster at .com
    mail_plugins = sieve
    global_script_path = /home/vmail/globalsieverc
}
auth default {
mechanisms = plain
  userdb static {
     args = uid=5000 gid=5000 home=/home/vmail/%d/%n allow_all_users=yes
  }
Thank you Very much.