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Error while archiving folder "Deleted items"

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I'm running Outlook 2002, in windows XP, SP3 and get the error message with the statement in cannot open the file because its password protected. Question is, (1.)how do I eliminate the required password?
(2.)When I look at the *.pst files I note that Outlook1.pst is over 256K so while it may not be related to the question how can I safely delete and recreate it to save disc space?

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by ---tk---

right click the file... choose "close personal folder" then un-hide hidden folders, and navigate to where the .pst resides.
C:\Documents and Settings\username\Local Settings\Application Data\Microsoft\Outlook
are where my .pst's reside. from there right click the file and delete it... although its really small, I wouldn't worry about it...

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