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.
http://support.microsoft.com/kb/2588842

After installation, everything is showing as it appears in the web client.