That is expected behavior. Outlook sees the action of moving an item out of a folder as being the same as Deleting that item. If it didn't, then a user could theoretically move an item from a shared folder into a personal folder and then delete it.
The user should be able to copy the item. However, if their Delete privileges are set to "None", then they are not able to take any action that would remove an item from the folder.
-SW
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