Ok I finally figured this one out.
We had a strange situation present itself in CFS2 when using the WinME RDRONLY External Rudder driver for external rudder pedals with the Saitek USB X36. What happened was that when the rudder pedals were pressed you also were getting elevator and aileron movement making the aircraft impossible to control if you used the external rudders. Some had thought this was tied to WinME or DirectX 8.0, neither was the case and here's how to fix it:
Open the "Settings" menu in CFS2 and select "Controllers Assignments" button.
Now Click the Joystick Axis button then select the Rudder Only in the "Joystick type" pull down list.
In the Assignment List select the X axis then click on the "Delete Joystick Assignment" button. Do the same for the Y axis so that the X and Y axis no longer appear in the list.
When finished set the "Saitek X36 Flight Controller USB" in the Joystick Type pulldown list and click OK to save.
Now your external rudders will work just as they should!