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Users often complain about the patchwork look of Outlook 2007/2010's calendar. This is caused by setting All Day Events to Show time as Busy and setting a color category on the item.

Items marked with hash lines are Tentative.

Items marked Out-of-Office are always purple, with the block around the appointment text using the category color.

Timed appointments are shown in the category color and the Free/Busy tags are shown in a small bar to the left of the appointment.

Tentative has hash marks
Busy uses the category color. 
Free is white (Outlook 2007) or a lighter shade of the color category (Outlook 2010).
Out-of-Office is purple

Day and Week calendars are also shown in the category colors when All Day events are marked busy or purple when the event is marked Out-of-Office. (In this screenshot, the Tentative appointment has a blue background because it's on the weekend, which is shaded blue.)

Appointment form showing the location of the Show time as command and All Day event box: