Outlook 2007 improves the SharePoint integration, which was already there in Outlook 2003. In a SharePoint list, you will find the "Connect to Outlook" option in the "Actions" menu in a list or library.

In Outlook 2003, we had the option to use a registry setting or Group Policy Object (GPO) option to disable that integration, if you wanted to block that integration. This is described at http://support.microsoft.com/kb/831057

However, a customer recently ran into the Outlook 2007 message saying that "You cannot use SharePoint. Your System Administrator has turned off that feature." The problem is that they had not implemented this for Outlook 2007, but they did recall having the 2003 option for that.

You see, you define that option for Outlook 2003 in the registry under HKCU\Software\Microsoft\Office\11.0\Outlook\Preferences\, but that clearly should not apply to Outlook 2007, which is version 12, not 11.

It turns out there is a 2007 version of that setting, but it was moved to HKCU\Software\Microsoft\Office\12.0\Outlook\Options\WSS\Disable. If you set that to 0, the message goes away. It's also important to note that the Office 2007 setup carried that setting from the old 2003 location and that's why it was there in the first place, even though nobody (but Office 2007 Setup and Outlook 2007) knew the new location.

This is in the process of being documented as part of the Office 2007 Resource Kit, but it's not published yet. It will likely go in this location, which right now has only a placeholder: http://technet2.microsoft.com/Office/en-us/library/a6a78bac-edf2-4f29-b94e-faee9086051c1033.mspx?mfr=true