Microsft Fax has been replaced by OutLook 97 (the Office version). Your colleague was right. The reason is, MS Fax isn't compatible with the MAPI standards, and causes Exchange servers to crash... There's an article at the MS site about this subject. So you could use Outlook 97 in replacement, though I don't like this product. We used it for a couple of months, and it hasn't all the functions of MS Fax.
So we use, for mail merging, Delrina Fax Pro. We have tested BVRP WinFax, Outlook, and Delrina. The last is the best, I think.

Hope it helps.