Hi. I am in exactly the same position as you are, using Outlook 2003 to
manage my congregation's contact data. I found the way that works best for
me is simply to have individual contact entries for each member of a family,
and to either enter their birthdays on the "Details" tab of each contact
entry (where there is a field provided for it), or to enter birthdays as
completely seperate items from the contacts in the calendar. I prefer the
second method, but that's just what suits me. ymmv. I make each birthday
entry as the person's first name followed by the letters "bd", and use the
autoformatting to pick up on the "bd" to colour it as a warning.

I tried using one contact record for a whole family, but it just didn't work
for me when I needed individual notes added. The seperate recored for a
family can be tied together using the "Contacts" field at the bottom left of
each contact entry. Guess this is a bit of work to set up, but it works OK
for me - admittedly I have two fairly small rural congregations, so a bigger
church might be a bit of a project.

Hope this helps - kind regards, Peter.