This has been bugging me for the longest time. I noticed that when a user is created on Exchange 2003, other users with Outlook 2007 cannot see the Free/Busy status.
It have always showed up as hashed, eg unavailable. Previouly I have fixed this by going to a station with Outlook 2003 installed and login to the account. So it got to be something Outlook 2007 needs but Exchange 2003 does not provide.
Recently I got a chance to fix it. Created a new user in Exchange 2003, checked. In my Outlook 2007 , the user status appeared as hashed. I went over to the user station with Outlook 2007 installed, send me an invitation. I accepted it and the status still showed hashed.
I restarted my Outlook using ClearFreeBusy and I can see the status now. Some times its the simplest of things.