A user reported yesterday that the Recycle Bin function on his XP workstation had stopped working. I determined that the scope was a bit smaller than that. When he deleted a file from any of the Redirected folders (Desktop, My Documents, etc.), the Recycle Bin no longer functioned. The file was simply deleted. Deleted from a non-redirected folder worked fine.
I have read pretty extensively on the topic and understand that VSS is the preferable method of restoring a file when using redirection. Indeed, not only do I have VSS running but I also run hourly incrementals with a backup product. Still, there's a chance for complete loss and, well, the Recycle Bin worked for him before.
I do see a RECYCLER folder in the Redirected My Documents, so that seems to be right. And I just tried another workstation (albeit Windows 7 x64) and RB functionality is fine.
Update: I did some further testing tonight. It looks like this has been going on for a few months. Indeed, it's affecting all Windows XP users. I just deployed a Windows 7 machine for someone this week and his recycle bin is working fine.
Update x2: It seems like this stopped working for all XP-based users in July. I wonder if a security update was pushed from MS around that time that we installed? I'm still hopeful to resolve this, but my client doesn't care so much because of our backup procedures.