You can add a Rule to the top of your Hotmail Rules list that says "If
folder is Deleted Items, then do nothing and do not apply additional rules
to these messages"
I tried that and variations of it (i.e., if the folder is not the InBox,
then do nothing and do not apply additional rules). Those rules would work
when I ran them manually, but not when they ran automatically on incoming
messages. That doesn't seem right, either but apparently that's the way it
is.
The only way to avoid it that I have found is to >never< synchronize the
Deleted Items folder. If I or someone else accidentally clicks on the
Deleted Items folder, I end up with a whole bunch of duplicated messages in
my local folders.
You would think that a Microsoft application would work with a Microsoft
mail service a little better than that. ;-)