I just switched from the HTC eris to the Droid and had no issues with IMAP on the eris which is running 1.5 OS. What's happening is I setup my personal domain email as imap and all works. I mark all messages in the inbox as read. When new email comes in it marks the entire inbox as new. I've deleted the account multiple times and done a hard reset. I even tested this in the store on 2 phones. Moto doesn't have an answer and I found this thread on the VZ forums Droid IMAP emails always Unread - Verizon | Forums and Blogs - Verizon Community which the OP is using the same hosting company as I am. I've never had a problem on a WinMo, BB or iPhone setting it up the same way. Something seems off but not sure what it is. I've setup GMail via the same mail app and that's working.