Outlook 2K2 only integrates with older versions of MSN Messenger...it does not integrate with v5.0 or later, and never will. Same with GameVoice.
The reason is that a lot of code had to be changed in MSN Messenger in order for it to install...and run...on XP. This is because Windows Messenger is a system component, and it's based on the same code base as MSN Messenger v4.6 and earlier. As such, MSN Messenger had to be retooled with a new code base, and that's why it no longer integrates with some apps such as Outlook on downlevel operating systems. On XP, these apps integrate with Windows Messenger without a problem.
You have two options:
- regress to v4.6 of Messenger
- upgrade to XP
As far as what it does, it's quite simple. Your contacts "buddy icons" will appear in open email messages from those particular contacts, which shows current online status, and allows you to immediate start an IM session directly from the email.