SyncToy Deletes Files even when set to "Contribute" ??

Scenario: SyncToy "My Backup" is set to "Contribute". Left drive is "S" right
drive is "T" Both drives are 1TB drives. S is internal, T is external. Both
are NTFS on Windows XP

Drive "S" contains Test1.doc, Test2.doc, Test3.doc

Run SyncToy and then S and T contain Test1, Test2 and Test3. (Correct)

Delete all three files on S drive and run SyncToy again and it renames the
test files on T drive and places them in the T:\Recycler (Incorrect! -
Contribute should not delete!)

Why is this happening? I have tried 1.4 and 2.0 Beta.

Thanks!