1. when I set action to 'Ask' I do NOT get a pop up.
OK, correction - there has to be "Ask, if fails, No action" - then the question should appear. So, the behavior is this:
"Ask, if fails, No action" - shows a question with the options delete/ignore
"No action" - the message is delivered
anything else - the message is deleted and replaced by the info text
2. if i set action to ' No Action' the email IS delivered but has the warning term 'suspicious' embedded in the subject line.
Yes, that's the expected behavior - the subject line is changed (you can configure that on the Behavior page), but the e-mail body is intact.
Finally, if I select 'move to chest' then I would like Avast to move the item to the chest . I dont understand why the email should deleted when asked to be moved to chest. There is already an action called 'delete' in Actions. Is this something to feedback to the developers?
No, as I was trying to explain, the settings on the Suspicious page are generally for something else (for actions on infected attachment for specific malware types). The e-mail heuristics is somehow affected by the Suspicious page in the end, but not all the options are supported. The engine cannot move the whole e-mail to Chest, it can be done only for attachments (when an infection is found in the attachment). So, such an option is not available for e-mail heuristics.