A user accidentally trashed the Windows XP registry and parts of XP folders on his workstation (don't ask!). This required a re-installation of XP and all software including MS Office 2003.
Fortunately all data survived intact and I was able to recover the user's "outlook.pst" database file. The "Test Account Settings" process functions correctly and appears to send and receive emails. The Deliver New Emails location is set to the "outlook.pst" file.
However, Outlook will send emails but does not keep copies in the Sent Items folder. It also appears to be reading the user's POP3 mail box on the hosting provider's server, but no new mail entries appear in the Inbox and mail remains on the server.
File permissions for "outlook.pst" definitely allow reading and writing, as modifications to Outlook address folders are correctly stored. The problem is only with sending and receiving new emails.
Where to from here???