I had this problem too, though I can't remember the modem type. Basically, WinFax doesn't work right with all modems, and whoever makes it doesn't care, so in essence, you may well be screwed.

I have a user that at home gets to use Outlook2000's WinFax Starter Edition v. 2 because he was set up under Outlook 2000 Internet Mail Only. Now we have him setup under a Outlook 2000 ...