We are using Merge replication to synchronize data. It is done between two SQL 2000 servers and SQL CE.

The Architecture is as follows:
There is one head-office (HEADOFFICE) SQL 2000 server which is a publisher and replicates data with one counter (COUNTER) SQL Server 2000. The COUNTER server has Pull Subscription for HEADOFFICE. The COUNTER server also acts as a re-publisher and publishes same data to handheld devices(SQL CE and anonymous subscribers).

The data should flow from HEADOFFICE to COUNTER and later to handheld device.

HEADOFFICE -----> COUNTER --------> Handheld Device
HEADOFFICE <----- COUNTER <-------- Handheld Device

We have been able to synchronize INSERTS and UPDATES between all three databases in HEADOFFICE, COUNTER and handheld device.
We are also able to synchronize any DELETES in HEADOFFICE and COUNTER to other databases.

However, in case when we delete any data from handheld device, the deletion is being propagated to COUNTER but it does not get propagated to HEADOFFICE.
The rowguid of the deleted row appears in Msmerge_tombstone table on COUNTER but HEADOFFICE does not delete the data from database.

Please let us know in case any further clarification is required.
Anyone, who has encounted similar situation may please provide pointers to solution.