Let's go over a couple of basics first.
Entourage creates Identities where the Mac OS creates Users. Each Identity
contains a database file. Inside this database is all of your data.
Microsoft Office also has a Microsoft Database daemon that's used to access
Notifications (2004)/Reminders (2008). This daemon is used by all of the
Office applications. If you have Reminders turned on, then there should be
ONE Microsoft Database daemon in your Startup Items. (check in System
Preferences --> Accounts)
To rebuild the database hold down the Option key when starting Entourage and
select to rebuild your database. I will automatically rebuild your current
default Identity's database.
I have the exact same problem with Office 08.
Holding down Option when starting Entourage just makes the Database
Manager open straight away where there are still no identities to fix.
It's a good job I use Apple Mail for emails and not Entourage.
1- Deleted "Microsoft User Data" folder under Documents
2- Deleted all com.microsoft.* under ~/Library/Preferences
3- Deleted Microsoft folder under ~/Library/Preferences
I then re-ran Office Setup Assistant, and problem solved.