I suspect this is a bug.

Correct. It's cosmetic, the compacting works fine.

TB has deleted everything except the snippet that the search function archives in the past

The most likely cause is that your anti-virus software did corrupt your mail files. Thunderbird then needs to repair the damage to function properly. At the first glance, this looks like Thunderbird deleted your messages, but the damage was already done before by your anti-virus software.

In any case, backing up your Thunderbird profile will avoid data loss in case this happens again. https://support.mozilla.org/kb/profiles-where-thunderbird-stores-user-data#w_backing-up-a-profile

These are some generic suggestions to avoid problems with anti-virus software.

Create an exception in your anti-virus software for the Thunderbird profile folder, so that the anti-virus real-time scanner will not scan it. http://kb.mozillazine.org/Profile_folder_-_Thunderbird

Don't let your anti-virus software scan incoming and outgoing messages.

Don't let your anti-virus software scan attachments.

Don't let your anti-virus software intercept your secure connection to the server.

Remove any add-ons your anti-virus software may have installed in Thunderbird.

Keep it working. http://kb.mozillazine.org/Keep_it_working_-_Thunderbird

While the box is misleading, other users may benefit if it is resolved. That's the only reason I mentioned it.

[ I have been ignoring it, but it irritated me today for some reason. Maybe it was the gloomy weather.]

How does Grandma tell the difference between a harmless reporting error and one that is important? Could that buggy code be applied somewhere else where it directs some users to do something REALLY BAD?

Blaming the anti-virus is slightly off-topic and misleading.

Pointing the finger at the anti-virus software is an assumption, which in invalid in this case because the instance which resulted in the deleted files was on a Linux machine (Ubuntu 16.04 LTS Desktop to be specific) and I had a (Client-driven) hardware issue recently which resulted in the necessity of obtaining a fresh install of everything on the fly, so to speak. The hardware vendor didn't have drivers for *nix, so installing Windows was the way to go.

I didn't use AV software in real-time as my permissions were very tight, so a daily scan was sufficient to make sure I wasn't infecting everyone else if I got a bad something in email. Mozilla has changed lots of things since then and a retrospective investigation is likely a waste of effort. I didn't make an issue of it at the time as it was a relatively low priority - people were dying and my missing emails were insignificant in comparison.

StayingRetired said

Blaming the anti-virus is slightly off-topic and misleading.

I would not say off tpic, it many not be entirely relevant in your instance. However the overwhelming majority of users use Windows and the majority of their apparent data losses come from their choice of anti virus. It remains the number one cause of apparent data loss from the compact process.

As a further off topic comment, work on compact dialogs is progressing here https://bugzilla.mozilla.org/show_bug.cgi?id=716412

I would suggest that granny would not have a clue as to the amount of disk space she had (she has a dell). So the simple reporting error would go entirely unnoticed. She is also more likely to be alarmed as to what "compacting" is, and does it mean something like squeezing or compressing?