The answer is not obvious or intuitive. I thought I had been here before, and I have!
Leave "INBOX." off of your move-to folder designation, in other words move the message to folder1.folder1A (also I don't think you can name folder1.1 that way, but I'm guessing that extra period was just something that popped in as you were changing your names to generic for the post.)
It is odd behavior that an error in setup re-directs the email somewhere non-existent without giving any kind of error or notification. This seems buggy, but i observed the same behavior as I tested the above.