This time Chapura offered only a "pay for upgrade" option, but luckily Palm itself provided a solution to the issue. To get the sync working again:
- Uninstall the old Palm Desktop and Chapura Pocket Mirror;
- Download and install Palm Desktop 6.2;
- Setup synchronization options and do the sync.
I have it working OK at the office and at home with Outlook 2003 and 2007 both in Windows XP. Also there is a separate conduit update from Palm to support Outlook 2007 if you don't want to re-install whole package, but I did not check whether it works with the old Palm Desktop or does not.