dovecot - Jan 2013 - failure trying to autocreate an Inbox that already exists

I have a new installation of Dovecot 2.1.12 and cannot select the Inbox without
getting this error:

c select inbox
c NO [SERVERBUG] Internal error occurred. Refer to server log for more
information. [2013-01-16 18:22:13]

Here's the server log:
dovecot[15643]: imap(u1): Error: Failed to autocreate mailbox INBOX: Mailbox
already exists

Auto create settings are currently set to 'no' -- when they were set to
create, the problem was the same.  Passwords are currently plaintext for testing
purposes -- Imap authentication works.

It's running on OS/X 10.7.3  Our config is below.  Thanks for any
suggestions...

# 2.1.12: /usr/local/etc/dovecot/dovecot.conf
# OS: Darwin 11.3.0 x86_64  
auth_debug_passwords = yes
auth_username_chars = 
disable_plaintext_auth = no
mail_location = mbox:~/mail:INBOX=/var/mail/%u
mail_privileged_group = mail
namespace inbox {
  inbox = yes
  location = 
  mailbox Drafts {
    special_use = \Drafts
  }
  mailbox INBOX {
    auto = no
  }
  mailbox Junk {
    special_use = \Junk
  }
  mailbox Sent {
    special_use = \Sent
  }
  mailbox "Sent Messages" {
    special_use = \Sent
  }
  mailbox Trash {
    special_use = \Trash
  }
  prefix = 
}
passdb {
  args = scheme=plain /etc/passwd-imap
  driver = passwd-file
}
protocols = imap
ssl = no
userdb {
  args = username_format=%n /etc/passwd-imap
  driver = passwd-file
}