joegz,
I don't know if I buy your explanation or not. We have hundreds of people here that are running Win2K and Outlook 2K that have PST files setup. Synchronization is not a problem as long as the OST file is setup properly.
PST files allow users to store large amounts of mail without using the exchange server disk space. For instance, every user at our company (thousands) are only allowed 17-20 MB of server space to store new mail. Once the user logs on, the mail is pulled down to the PST (which might be locally on the hard drive, or out on the server). This makes perfect sense to have. If users weren't using PST files, they would run out of disk space rather quickly.
Tamir,
How are you connected? Over a LAN or dial-up?
As long as your OST file is setup, then it should only pull changes from your PST into the OST file. Go to Tools->Services and make sure you only have one personal folder listed. Then double-click on Microsoft Exchange Server, go to Advanced->Offline Folder File Settings. If the "disable offline use" button is greyed out, then it's not setup properly. Post back if this is the case. Otherwise, you should be okay.