MrsMoose
I have just tested this out myself,
I set up a new test folder in my Ntlworld email account. Then went into the Gmail app on my android phone and saw the same message that you report "XXYY plus a 0 (to show it's empty) - write at the top of the screen."
I then went back to the my Ntlworld account and deleted the test folder. When Iopened the Gmail app again the test folder and the "empty" message had disappeared.
That's what I expected because the Gmail app should just replicate what appears in your VM webmail account. So it seems your Gmail app is not playing nicely.
I would suggest that you sign into your Blueyonder account on the VM website, you can do that from here https://mail.virginmedia.com Then check that the XXYY folder does not appear in the "My folders" list and if it does delete it.
Then go into the Webmail settings by clicking on the cog symbol to the top right of the page. Then click on "E-mail" in the menu that comes up on the left and three boxes will open up. Click on the "Change IMAP subscriptions" box and a list of all your folders will come up. XXYY should not be listed, but if it is then make sure that the box beside it is not ticked.
Then click on "Save" at the bottom of the list.
Do you use any other email apps to manage your Blueyonder account, such as Outlook or Mail perhaps on a laptop? If so check those and make sure that XXYY does not show up on those. Again if it does you should delete it from those apps as well.
Then go back and restart the Gmail app.
If you do all that and the XXYY folder is still showing in the Gmail app then I am stumped.
I don't think VM will be able to help either because if the XXYY folder is not present in your Blueyonder account then it's a Gmail issue not a VM problem.
One thing I have just wondered though. After deleting the XXYY folder from your Blueyonder account did you set up a XXYY folder in your Gmail account? If so the message you are seeing could relate to the Gmail version not the now deleted Bluyonder folder.
Coenoby