"Mail needs to change the IMAP path prefix"

Ok, I figured out a fairly easy solution and I know it at least works with my Fastmail account.
1. First Be sure that Mail.app is not open.
2. Then make a "Mail (backup)" folder on your desktop. (this will ensure that if anything goes wrong you can just re-drag it back in to put it back to how it was.)

3. Then Go into your Home/Library/Mail/ folder and drag the entire contents of that file into your backup file.

4. Open Mail which will re-create a lot of those files you just drug over.
5. Close Mail.

6. If you have any files "on your mac" they will be in the Mail (backup)/Mailboxes folder. So for instance, if you had a folder called receipts it will be receipts.mbox. Drag any and/or all of those files into your Home/Library/Mail/Mailboxes folder.

7. Re-open mail and you should see "On My Mac" with a dropdown. All of your folders will be there.

8. Click on the "Trash" folder within your IMAP folders on the left and then go to Mailbox -> Use this mailbox for... and select Trash. Do this for each of your "Drafts", "Sent", "Junk", and "Trash" folders in your IMAP account. This will use your IMAP boxes as these folders instead of creating them on your mac. This way you have access to things like your sent mail even if you are not at home.

You can also specify if you want to auto-delete your trash after they are a day old, a week old, etc.

I no longer have the "IMAP prefix" pop-up and my mail looks clean on the left side.

On additional step you may need to take is to click on each of the "on my mac" mailboxes and go to Mailbox -> Rebuild. Before I did this, I could see that the mailboxes were there but I could not see any of the messages.

TCStyle wrote:
I also have this annoying pop-up every time I open mail. The problem is, I need it the way it is set now, not the way mail.app wants it.

If I let it change the path prefix nothing links correctly

I did not realize that if I reply to a post in the middle of the thread it does not kick it to the end. I found a solution and replied on Dec. 20th. See above for instruction on how to fix this issue.

The solution I posted will keep "INBOX" as the prefix but will correct issues with it, and it removed the IMAP Prefix prompt that I was getting every time I opened Apple Mail.