Gary,
I am using Outlook XP and SME 5.6u4 at home and was able to use Outlook LDAP. First off, not to flame you, but the LDAP capablities of Outlook are crap. I find Outlook Express to be more powerful. Search: dc=domain,dc=com (that is all, just like shown in Directory on server-manager).
I was able to search for names by using either 'begins with' or 'contains' in the first name field. If I typed "ryan" Outlook found my ldap entry. I was able to send an email using the ldap address book search for 'ryan'.
The only way I could get Outlook to display everything in SME ldap was to use the 'contains' option and enter either the city or state name in the 'City' field in Outlook. This dumps all users and groups from SME ldap. The 'City' feild in Outlook ldap search corresponds to the 'Default City' in your server-manager Directory. I am able to pull up all data on any user and transfer it to the personal address book in Outlook with a couple of clicks.
Bout a 10 months ago, I discovered that restoring a 5.6 server with a 5.5 backup will wreck the scehma and result in failed searches. I can't remember the errors I was getting in Outlook, but I had to resort to installing 5.5 fresh, restore my 5.5 backup, then perform an upgrade to 5.6.
I don't use Twiggi, but IMP was not able to read the ldap directory either when I was having trouble with Outlook ldap searches due to the 5.6 restore from 5.5 backup.
Hope that helps.
ryan