when trying to address an email clicking the To: button and slelecting the
contact name from the address book the 'display as' details are shown in the
To; field of the email. However these emails are never delivered as they are
not sent to the corresponding email address. My Outlook 2003 simply tries to
deliver to "John Smith" rather than "john.smith@hotmail.com"
Any thoughts?

I think the problem lies in the 'display as' field in Contact details...