Here's some screen grabs of the settings I use. I do not use the online iCal calendar. My iphone is synced to outlook and the local ical calendar hosted on my laptop.
I can enter and receive/accept appointments using any of these three calendars and they all update and sync.
The calendar called "No category" is my outlook calendar.
If I enter any appointments they have to be entered on the calendar called "work" on my laptop and phone – otherwise outlook does not pick them up.
As demichae said in his post above "Outlook doesn't see the stuff in iCal" – at least the online iCal stuff.
It's not very straightforward.
Hope this helps.
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