iPhoto 8 (iLife 09) needs a tweak to work with Outlook for Mac for iPhoto to be able to send photos via Outlook. Download attached DMG and read the ReadMe file. Information good as of 11/23/10 and tested with iPhoto 8.1.2 and Outlook 14.0.1 on 10.6.5.

Download file "iPhoto Microsoft Outlook 2011 enabler.dmg"