MrFewkes - 3:35 pm on Aug 9, 2011 (gmt 0)
Dont put a message up "out of stock" until they check out.
This way - they may build up their cart - then checkout and can only buy the instock items. At least this way you get to keep the rest of the sale - which they may have been put off by the out of stock item if they saw that early on.
Leave all items on site and instock until you check out.
This sends good signals to the search engines who may de-rank sites with "out of stock" all over the show. Well they may.
Remember - treat customers with your own goals in mind - not theirs.
They would do you over for a few $ if they had a chance (many of mine would anyway) - so dont be worried about miffing them off with the out of stock at checkout.
At least you get the se traffic and also they may browse round for other items.