Graham
Thanks for your reply, I could not get what you suggestion to work. I went to File > Account Settings > E-Mail Tab and could only find a Change option but not Change Folder.
I had a look under Accounts Settings and the Data File Tab. There is an option to change the data file there. However, it is restricted. I have two folders ( a new and old ) connected to the same email address and different pst files. I can move items from one folder or pst file to the other which I am doing.
However, it looks like I will not be able remove the empty folder as it is connected to an active email address.