I haven't read this problem in here. I'm running x64 and I have checked the box in W Mail - Options to automatically display Folders with unread messages. For the most part, when I open W Mail, only the folders with unread mail expand, right down to the exact sub-folder. However, once in a while, when I open W Mail, every folder and sub-folder will expand even though there isn't any unread mail. I have about 500 sub-folders under 10 regular folders. What's confusing is that it only happens once in a while. I'm running AVG Free virus scan.
Update:
June 22, 2009: After a month of testing, I found that if any mail in a sub-category is left unread and Mail is opened, all categories and sub-categories after the unread mail is expanded even if there is no unread mail in the remaining sub-categories. I believe this is a bug in Windows Mail. I guess I'll have to make sure that all my mail is read before closing down Windows Mail.
Can someone try to reproduce this same problem on their computer? I would like to know if this problem is native to Windows Mail in Vista or something else.