I start with an out of the box site collection using the Team Site as the top level site Template. I Choose Site Actions>Edit in SharePoint Designer to opent SharePoint Designer 2010.

I choose External Content Types in the Navigation Pane of SharePoint Designer 2010.

I click on the External Content Type Icon in the Ribbon which is how I will create a new External Content Type. Since this is my development Server I have several already created but I will create a new one here.

I click the Link in the Name area to name this external content type. I name it NorthWindCustomers, I also name the Display Name the same thing.

I click the drop down menu for Office Item Type and select Contact.

I make sure that the Office Sync for external list is set to Enabled.

I click the link to discover external data sources

I click the Add Connection button.

I select SQL Server from the drop down list since I'm connecting to a SQL Server Database.

I Fill in the SQL Server Connection Modal Window text boxes as appropriate and click OK. In this case the instance of SQL Server that I have NorthWind on is sharepoint that's why i added .\sharepoint to the Database Server text box. In other environments this would be different in most cases.

I click the + sign next to NorthWind Customers to expand it.

I click the + sign next to Tables to expand it.

I right click on the Customers table and choose Create All Operations.

On the first page of the Operation Properties Wizard I click Next.

With CustomerID selected in Data Source Elements I click the drop down menu for Office Property and map to the Office CustomerID property.

I set the CompanyName mapping as shown.

I map the ContactName field as shown.

I map the ContactTitle Field as shown.

I map the Address as shown.

I map the City field as shown.

I map the Region field as shown.

I map the PostalCode Field as shown.

I map the Country Field as shown. (I map it to the mailing address region country)

I map the Phone Field as shown.

I map the Fax Field as shown. I then click Next.

I do not add a filter parameter but if this database table with over 2000 or so items I would add a filter parameter to avoid exceeding my list view threshold which would result in an error when the web part tried to render. So I click Finish.

It's very important to remember to hit save in the quick access toolbar (I have forgotten many times…) after I'm sure it's done saving I close SharePoint Designer.

At this point a farm administrator needs to configure permissions to the external content type. This is really a separate blog so i'll just show the finished screenshot.

There are many ways to do this but I'll click Site Actions>More Options

I filter by list and choose External List for the template. Then I click Create.

I'll name the list NorthWindCustomers and enter NorthwindCustomers in the External Content Type Field and click CTRL + K to do a lookup and fill in the value. Then I click Create.

I click the Connect to Outlook Icon in the ribbon.

I clicked o.k. to a couple of modal windows that i was too slow to capture and BAM the contacts are in outlook!!!!!
All with NO CODE by the way!!!