I migrated a bunch of old email over to Office 365 recently. Even though I set the archive policy on a bunch of old emails in my Sent Mail folder to "1 day archive" they don't appear to be moving into the archive. Likewise there are tons of emails in my Deleted Items folder that have Expired but are still there. So in general it doesn't seem like the online archiving/deleting feature is working. Here are some more specifics:
I believe my mailbox is Archive enabled because I can see an "Archive" mailbox when I use the Outlook web client. I can also navigate into the archive using Outlook 2010 and manually drag stuff around in there.
After I moved all my old emails over to Office 365, I suspected that the expiration dates on those emails would be based on when they were last touched/modified by me rather than by the dates they were originally received/sent. So to force archive to happen soon I created a new Personal retention tag called "Move To Archive Immediately". I set the retention period to 1 day after which it should move to the archive. I then applied this retention flag to tons of old emails in my Sent Mail folder. I waited weeks for something to happen. And now, when I right click on any of those old emails and choose Assign Policy I can see that the archive policy is 1 day. And yet these emails still appear in my Sent Mail folder.
When I right click on my Deleted Items folder, I can see the Folder Policy says "Deleted Items (60 days)." According to the online configuration I can see that this policy is supposed to cause these items to be held for 60 days after which they are "Delete (Temporarily Recoverable)". The Online Archive policy for this folder is "Use Parent Folder". When I browse the old email in my Deleted Items folder I can see many emails where the expiration date is long past. I don't understand why these emails are still visible in my Deleted Items folder.
I saw in another post somewhere that online archiving only happens if the mailbox is bigger than 10mb. I have far more than 10mb of data.