I have some old folders that have since been deleted, and they still appear in the menu for choosing where to move or copy files to (the icons for them are semi transparent). As they no longer exist how do I remove these completely from the menu?
Those folders remain there if some other rule is still referencing them. Make sure you remove all references to those folders in all your rules (the rules should have a yellow badge on them).
Odd that there was no yellow badge. Is it possible those folders were on an external drive? Maybe Hazel thought they were just temporarily inaccessible as opposed to deleted.