Outlook startup error - "Your IMAP server wants to alert you to the following: Folder name contains invalid delimiters" - after recent Office SP3 update

Hello -

After applying the recent Office SP3 update at the end of July 2013, I now get the following error when Outlook 2010 is starting:

"Your IMAP server wants to alert you to the following: Folder name contains invalid delimiters"

I called GoDaddy and they have never seen this error.

My wife is getting the same error on her laptop, with her Outlook after the recent update.

I checked every folder, took out all spaces / non alpha characters - but I still get the same error.

Has anyone seen this? This is a new error after applying the recent Office update.

I use GoDaddy as my email provider, using IMAP service.

Thanks.