One of our CRM 2011 customers has a modified sitemap. Apparently, some of there machines where not displaying the navigation/sitemap correctly in outlook, but on the same machine the web client was just fine.
CRM 2011 Outlook Client Screen Shot of Navigation – See Order under Tribridge
Web Client Scren Shot of Navigation – Same Machine
It turns out this machine did not have the Office 2010 Cumulative Update for August 2011.
After installation, everything is showing as it appears in the web client.