Thanks micro,
From what was explained to me, even though it looks like you have deleted files, they still take up space in the OE folder (dead white space). It can look like your folder is partially or even completely empty, but the deleted files still take up part of the total space allowed in the folder. When the folder is too full of files and dead white space, OE malfunctions. I have googled dead white space and found nothing useful. Maybe I remember the term incorrectly. I have found
"How to recover deleted messages in Outlook Express?
If you deleted some important messages or empty your deleted mail folder, please don't worry until you compact your mail folders or put new messages to the mail folders. Outlook Express does not immediately delete deleted messages from its mail folder. It keeps them for a while, depending on mail file size, number of new messages and folder compacting. Usually when Outlook Express compacts a folder, it deletes deleted messages entirely."
Maybe I just need to delete a lot of files and then compact the folder. Not an elegant solution. I would still like to know how to move every file in the folder to a new folder and start with an empty folder.