Helping people with computers... one answer at a time.
The recent redesign of the Windows Live Hotmail has many people reporting missing folders. It's likely that they're not missing, just hiding.
I'm getting several reports of people who are unable to access the folders that they may have set up in Hotmail. Typically, the claim is that the folders are "gone" after the Hotmail UI update.
I did a little looking into it, and found at least a couple of possibilities that would indicate that the folders aren't gone at all.
They're just hiding.
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First, let me show you what I see:

As you can see, beneath "Deleted" I have my own folder "Leos Folder".
However, if the browser window containing Hotmail is too small to allow Hotmail to show the full list of folders, this happens:

You can see that my folder has disappeared.
If you look closely, though, you'll also see that a scrollbar has appeared next to the folder list. Use that to scroll down, and the rest of the folders can be seen:

I believe that a lot of people are simply missing this particular change to the Hotmail user interface. Your folders are there, just in a list that's partially obscured.
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Now, along those same lines I discovered an issue that can only be described as a bug in the Hotmail user interface.
If I choose "Manage Folders", at the bottom of the folder list, I get this:

However, if I make the browser window narrower, it eventually looks like this:

As you can see, the folder names have disappeared! The column has resized to the point of not showing them at all.
Now, that's just under 1000 pixels wide, which means it probably works well at 1024x768 and larger screens, but if you have, say, 800x600, I know of no solution to manage your folders by name without making your window larger, or perhaps changing the text size to be smaller so that more can fit in the allotted space. (In IE, hit View, Text Size, and then select the next smaller setting than your current setting.)
The fact that the names are allowed to disappear is, in my opinion, a bug in the Windows Live Hotmail user interface. At a minimum, they should have resized a different, less important column, or allowed the columns to be resized.
Article C3579 - November 30, 2008
I have the same problem, all my folders and the emails in them have gone. No scroll bar. I am using Windows Live mail and had two different email accounts. I changed my password but no others changes I can recall.
Posted by: Baz at July 13, 2011 9:14 PMI was in "manage folders" where I set to delete 1 folder.
After I clicked "save" I noticed Hotmail had deleted 4 other folders?
these folders hold important information, any ideas how to get them back?
14-Oct-2011
You will find a very small direction arrow placed on one or maybe two folders. Click this and it will take you to the missing folders.
Alternatively view Hotmail directly via your internet browser by typing Hotmail.com into the address bar and log in.All the folders that are on MS server will show up here.If not they have been deleted.
Posted by: johnpro2 at November 15, 2011 2:27 PMJp
I deleted some folders on my msn/hotmail account on my iphone. Now those folders are gone on my imac and mac book. I didn't want to delete them on the computers. Will a Time machine restore them or can I recover them another way?
Posted by: Dave at January 14, 2012 11:03 AMDave,
Posted by: Connie at January 14, 2012 1:39 PMIt's a common misconception that the folders are actually on the device you are reading them from. But the folders actually reside on the Hotmail servers. Using any particular equipment to delete them (such as your phone) will delete the online folder. Then when you look at the account from another device (such as your computer) you will not be able to find them. You might be able to recover the folders from the trash folder. If you are able to restore the folders, they will then be accessible from all your viewing devices.