Thank you  for your inputs.

Let me add this :  Although the .OST file was created, no synchronization takes place because the file size always shows 43kb even if I delete it and recreate it.  To replicate the problem, From Outlook2000: I click on Tools, Synchronize, Offline Folder Settings. The Offline Folder Settings box should have shown all the folders to be setup offline, but the box is grayed out. When I click on Ok, I got the Outllib.dll error message.

There must be something missing somewhere. Any more inputs are greatly appreciated.