I am using Outlook 2003 with Exchange 2000. I believe the Sync Issues folder was created back when my OL was in cached mode. My OL account has converted to non-cached mode since then, but the folder is still there.
The Sync Issues has 3 sub-folders(Conflicts, Local Failures & Server Failures). All are empty. The Delete function is grayed out when the folder or its sub-folders are selected so it’s impossible to get rid of them.