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I misspoke, Sync does not honor the Create logically linked items for duplicate URLs option, instead it should always use this logic (to prevent the behavior you are describing).
When the duplicate items are created when syncing, do the new items have the same or different urls than the existing duplicates?
If they are the same, then something is going wrong in the duplicate prevention logic in Ultra Recall, if they are different, then for some reason Outlook is returning a different url when syncing...
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