This is true.Can anybody further confirm this? Ockie?
Say on drive 1 you have 10gb of movies, and 10gb of pictures. You hit duplication on the pictures folder. So now Drive 2 has 10gb of pictures on it due to duplication. Drive 1 fails. You lose 10gb of movies, but WHS knows that pictures on drive 1 is duplicated, so it now points to drive 2 instead of drive 1.
However, it will not automatically reduplicate 10gb of pictures from Drive 2 to Drive 3 unless you explicitly tell it to.