Hi Kevin,
No your first statement is not correct. Prior to Exchange 2003 SP2, DSProxy would refer clients to global catalogs that were in the same AD site as the Exchange server, as well as, prefer GCs that were in the same domain as the Exchange server.
In Exchange 2003 SP2, we altered the algorithm so that we would attempt to provide the Outlook client with a GC that matched the same domain as the mailbox-enabled user. However, this has no bearing on the Outlook client's location in terms of AD Sites and Services, we still utilize DSAccess to determine the GC list and DSAccess builds its topology based on the Exchange server's AD site and those directly connected to it.
The Closest GC registry key that is available in Outlook 2002 and later is so that you can configure your clients to use GCs that are within their AD site, as opposed to, using the GCs that DSProxy is providing that are in or near the Exchange server's AD site. However, there are a few problems with Closest GC that are worth mentioning:
1. This key cannot be used in the Exchange Resource Forest Scenario as the GC used by Outlook must be one in the Resource Forest where the mailboxes are located.
2. Exchange performs a series of suitability tests to make sure a GC is ready/suitable for use by Exchange and its clients; this registry key bypasses that option, which could lead to a bad experience for the client.
Ross