The first debug output I posted is from when I try to add a new email domain that hasn't been previously created on this server. In this case, the folders are NOT created on the mail server.
The second debug output I posted is from when I made changes to the password of an existing mailbox that was created prior to me messing things up. Therefore, the domain and mailbox folders already existed on the mail server. Furthermore, the password is actually changed so it appears that ISPConfig is performing the correct action.