Thanks for your reply and sorry for venting my frustrations on line. Working with M$ software is like pulling teeth - extremely slow, difficult, confusing and painful. This is because this software is over-engineered, packed with all kinds of stuff to appeal to everyobody (thus to monopolize the market) and digging through all the clutter of menus, options and features, is very time consuming, especially that the online help is not very helpful is you do not know jargon term for every feature they decided to include. It like going to the supermarket to buy the necessities of life - its illusion of coice is an adertising gimmick forcing the unsuspecting person to run throught the guntlet of displayed products to entice him.her to buy more.
This is anti-thesis of a professional tool that his highly specialized. You do not see, say, profesional mechanics working with those all-in-one tools - they have specialized tool for every job. Simplicty is a virtue - and that virtue has been sacrificed on the altar of conspicuous consumption in this barbaric land.
Anyway, I was able to solve the problem - there is an obscure feature (apparently the default) that keeps the reply with the original message rather than saving it in the "sent" folder. You have to uncheck it to have your outgoing messages saved in the "sent" folder.
I think there is a broader lesson to be learned from it - that there is a limit to all the "consumer choices" beyond which they become a nuissance and distraction. I am not quite sure where extactly that limit is, but I sense that M$ software is approaching it.
BTW, I recently heard that a new BMW that takes the M$ appraoch in car design and introduces meanu-style electronic controls (which allowed packing the car with all kinds of new gizmos) instead of mechanical knobs and levers was a big marketing flop. Good riddance!
Wojtek