IMAP folders holding both messages and subfolders

[stuck]

At work we have been moved onto an Exchange Server/Outlook 2007 system. Our old mail was 'archived' as an IMAP account and appears within Outlook as a separate set of folders. These folders don't act as a separate account, i.e. they are purely a repository for messages.

The IMAP format that has been used for these 'archive' folders allows the folders to hold both messages AND sub-folders at the same time and Outlook happily reads and accesses this format.

BUT...

If I try to create a new ()sub)folder within these 'archive' folders (which we have been encouraged to do because our native Exchange/Outlook folders are quota limited) then I can only create folders that hold messages OR hold sub-folders, not both.

Is it possible to get Outlook to create an IMAP folder in the format that allows the coexistence of messages and folders within the one folder? Or is it a setting in Exchange that needs a tweak or could it be a setting somewhere else, perhaps on the server that hosts the IMAP folders?

I've not had much luck Googling this issue. Most hits imply IMAP folders can only hold messages or folders. That may be so but I've definitely got an IMAP folder structure where folders can hold both at the same time and everything is accessible.

Ken