I have suffered almost the same problem as Ladyliberty.
I run XP Home with SP2 and OE Ver 6.
Everytime I close Outlook Express I used to get a window pop p, asking me if I want to recover disk space by compacting folders.
About a year ago I made the mistake of clicking on Yes (or OK or whatever), only to find that my HDD went beserk for over an hour and my machine became SO SLOW that there was no point trying to do anything before the process had finished.
DISASTER ..... when it did finish, I found that EVERY item in my Inbox had gone. Both read and un-read emails. All my other sub-folders still contained the emails I had moved into them, but the 1,500 or so items in my Inbox had gone.
Since then I have been very careful to always hit the CANCEL button in that window ......... until yesterday

My mouse pointer had disappeared off the screen and I made the error of hitting the enter key to try to make things happen. That "Compact Folders" window was still active, although not visible on my screen, and it defaults to YES.
So yesterday I lost around 3,400 emails.
It gets worse, because now the Compact Folders Routine automatically runs everytime I close Outlook Express, which means for 15 - 20 mins after each OE session, I can't do a damned thing.
Why does OE have that Compact Folders Facility if it is SO DESTRUCTIVE ?
Why don't they warn you that pressing OK will destroy lots of data without asking for further confirmation that this is what you want to do ?
How can I stop OE from automatically running this Compaction Routine everytime I close the program ? (There is nothing in "tools", "settings", or "help" relating to this problem).
Is there any way to recover the lost data ?
If I now run OE and click on Inbox ... I just get "There are no messages to display"
But if I go and look where all the email data files are stored, Inbox.dbx shows as being 1.9GB in size !
All the other sub-folders where I move my sorted email messages to, still work fine.
Grumtatt