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This was happening to me in the 5.10 release, IIRC. It's also happening in the latest SP. I use a webdav server, and I configured a new install of OW to use the bookmarks on that server. When I entered my info and synced it, it erased the remote bookmarks. It never asked if I wanted to erase them.

The help file says "If bookmarks files are found to already exist on the server (say, because you previously enabled synchronization on another machine) you will be prompted and given the option to use either the local bookmarks (replacing those on the server) or the server bookmarks (which will be used instead of the local bookmarks files)."

But that doesn't seem to be happening.