Are you able to confirm if you're selecting contacts from the Global Address List (via MAPI) or from the local contact list in Outlook? Something I've seen in the past is the local Outlook address book gets corrupted somehow leading to bad recipients being added to the outgoing message. Flushing out the local address book should help if that is the case.
Kyle Kerst
IT Coordinator
SmarterTools Inc.
www.smartertools.com