When I enable the Do not use Cached Exchange Mode for all new Outlook profiles policy setting in Microsoft Office Outlook 2007, Cached Exchange Mode is enabled instead of disabled. Why doesn't that policy setting turn off Cached Exchange Mode?
Apparently, this setting isn't set up correctly in the Outlk12.adm administrative template file. You can see the problem if you look at the .adm file itself, and not just at the information exposed in Group Policy Editor (GPE). You can download Outlook 2007 administrative templates from http://www.microsoft.com/downloads/details.aspx?FamilyID=92d8519a-e143-4aee-8f7a-e4bbaeba13e7. Once you've run the download file and extracted the .adm files, open the Outlk12.adm file in Notepad.
Because Office 2007 .adm files are fully localized, it's not as easy to look up settings in them as it was in the .adm files of previous versions of Office. If you know the name that GPE displays for the .adm file, you can search for it to find the token that serves as a marker for the policy setting. In this case, search for Do not use Cached Exchange Mode. You'll find the following entry in the .adm file: . . .

