I don't use it so I don't know the problem but shouldn't there be an options or preferences menu within Outlook that lets you set it up the way you want. There could be a problem with having admin privileges when setting the defaults actions. Is his account set up with admin privileges?
In my experience 2003 Outlook will remember the screen layout between sessions. I would suggest that you might want to attempt a repair of the installation. Follow that up with an update session with MS and be sure to update the Office components which you might have installed. Win 7 shouldn't make it run differently.
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