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The big thing to keep in mind with Outlook is that it really is just a viewer. The Favorites folder under Public Folders in Outlook is not an Exchange public folder. It just contains the shortcuts to other public folders. You can move your most frequently used public folders to the Favorites folder enabling you to access these folders more quickly. However, when you move a public folder to the Favorites folder, only a shortcut is created and the actual structure of the public folder hierarchy on the Exchange server remains unchanged.
Since the Favorites folder is just a UI feature of Outlook, you will not find it in Exchange System Manager.
The Favorites folder can not be hidden or deleted, however it can be renamed if desired.
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