An interesting feature of using Gmail with Outlook is the ability to create nested folders as sub-folders of the Inbox (see this post for more).
One problem, however, is if the Inbox portion of the label isn’t formatted correctly, you will see this error:
“Cannot move the items. The server responded: ‘No Folder Inbox/Sub (Failure)’.”
The solution for this is quite simple, actually. The portion of the label called Inbox must be in ALL CAPS.
So, for the above, simply re-name it to INBOX/Sub (from Inbox/Sub)
Basically, Outlook is looking for an ALL CAPS folder name for Inbox.