Upgrade installations always require some tweaking and rarely work as they
should. The upgrade routine removes your address book service (which in your
case wasn't even Outlook's) and installs the next one in line: in your case
the LDAP. Since you obviously do not use an LDAP, you must now remove it and
install the Outlook Address Book Service instead.
http://support.microsoft.com/default.aspx?scid=kb;en-us;287563&Product=ol2002
We recommend that if you attempt upgrade installations, you always create a
new Outlook profile right away. There are likely other settings from your
old one that will confound you as well. I never use an upgrade installation
with Office. The upgrade routine would have to improve a bit even to qualify
as poor.