Help! IMAP!

[Gwendolyn]

I have (s/mailhost/<my mailhost>/) in my .muttrc:

set   folder={mailhost}    # directory with all mail folders
set   spoolfile {mailhost}inbox

Yet, when I try to start up mutt, I'm getting a "no such directory 
/var/mail/gschmidt" without it trying to go to the mailserver?

What else should I be doing?

gwen.