i've encountered similar problems.
my system is:
exchange 2003, ol2003 on a terminal server and ol2003 on local machine ur on local machine, local machine running win xp.
after playing around w/ the settings i could track down most of the issue.
i switched my outlook to exchange cache mode. after that i could sync folders w/o duplicates after resyncing again.
the only duplicate that occures is when creating an infoitem in ur then syncing twice. the new created item comes up in ur twice. in ol only once.
after deleting the new item in ur, keeping the resynced second item. no more duplicates show up.
new created items in ol coming up only once in ur.
conclusion. ol-folder-sync works as long as u add new items in ol only, changeing items in ol and or ur works fine.
now i can use ol-syncing