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Messages do not appear unless folder changed

I've got a customer running Outlook 2007 as part of SBS 2007. It's an xp pro, sp2 box. Running AVG 7.5 for it's AV. It's a new DELL, Duo Core with 2GB of ram.
When a new message arrives into outlook the status near the bottom of the screen shows receiving X of X messages. However, the pane that shows the list of emails in your inbox does not show the message. If I click to another folder, such as Outbox, then back to inbox...there it sits! I don't even know where to start on this one. Ideas?
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Is the outlook client configured in cached mode?  

Has the view been modified to only show specific types of emails?
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Cached mode only works when using exchange, correct? He's using pop3/smtp.
The view hasn't been changed as far as I can tell. Is there a way to set it back to default?
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