You never posted that image (the one showing the [Gmail] folders) before. All of your prior screen shots had Sent Mail at the root. In this one, its moved to the normal location (as a child of [Gmail]).
You might have heard of the expression "I'm from Missouri and you'll have to show me". If somebody tells me something that is the opposite of what I've seen (or think I know) I need to ask questions to figure out whats going on. I am unfortunately, very used to people looking for help frequently making mistakes, or not providing enough information or context to let somebody help them. Sometimes the discrepancy is because they've run into a bug that I wasn't aware of. Or I just don't know enough about the subject
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Otherwise I'll have to create a new thread since this thread is going in circles."
Don't. I'm saying that as a moderator. Our rules about cross-posting forbid that. As a minimum I'll lock the other thread.
I realize you're frustrated, but we are making progress now that you've shown me the screen shot with the [Gmail] folder. I am puzzled though why you get that with a empty server directory in the advanced settings and get a flattened folder hierarchy with a [Gmail] server directory in the advanced settings. That is the exact opposite of what I used to see using older versions of Thunderbird. Currently, setting [Gmail] has no effect in my profile.
Webmail refers to the web page used read and send email provided by your email provider. With Gmail you needed to go to that web page and select its settings in order to go to the "Forwarding and POP/IMAP" tab used to enable IMAP (unless things have changed recently).
I have two Gmail accounts, one IMAP and the other POP. I've made more than the required changes in the settings via webmail for the IMAP account, but don't think I did that for the POP account. Perhaps that has some effect. Let me delete and replace the POP account with a IMAP account, and see if I can duplicate what you describe. If not, I'll try signing up for yet another Gmail email address and use it in a new profile (start fresh).
"All is good except that the Archives folder DOES NOT have any of my old archives from before I made all these changes"
I understand how you got the new archives folder and why it has one archived test message. However, I still don't understand how you created the archives before and what folder were they in. Just tell me how you archived stuff before. I don't know if we are talking about lost data, a missing folder, the archives being in a unsubscribed folder (so you don't see it anymore) or ....
All that you've really said is "I had old archived mail before I made changes to TB showing the mail grouping the way I set it up now. " Does that mean you've lost the original Archives folder and when you re-created one you expected the archived messages to be in it?
Try unchecking "show only subscribed folders" in the advanced settings and restarting. That should show every folder that exists. See if you can spot a folder with the missing archived messages. If that doesn't help give Thunderbird a couple of minutes to update the global index and then do a global search for one of the archived messages.