So, Thunderbird will display the system tray icon and a number badge showing there is new mail, when nothing else in Thunderbird indicates there is a new email. In order to clear it I have to click on the Hotmail (now Outlook.com) folder in the Unified Folders area.
See the video here: https://imgur.com/a/WrBwWAz where I click on each folder but only clicking on the inbox for my Hotmail email will reset the new mail indicator.
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