Teams Policies will never delete data other than Teams data inside the mailbox. This is by design and enforced in Code written inside the Exchange MFA. There is an outlook bug that makes it seems that a Teams retention policy is applied at a folder level.
This is causing confusion, and thanks for raising it. We are working with the Outlook Team to get this fixed.
Please attach screenshots if you can.
Ansuman | Teams Security and Compliance
Best Response confirmed by
Calum Steen (Occasional Contributor)