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Doesn't sound like you have a run of the mill environment, so any information given is going to be pretty shallow. As you'd no doubt be aware XOOPS does not support any other DB other than MySQL, so you'll be on your own with MSSQL. As for full intergration XOOPS seperates design into templates for visual layout, and themes for visual presentation (eye candy) and are not hugely difficult to get the hang of.
One thing I will point out though is as much as I love XOops, I am not a big fan of the user/group management functionality, especially if you have a user base of more than 200 users. It's fine for administering 1 user at a time, but as soon as you need to administer in bulk it really works against you. So much so that I've used SQL statements directly on the DB to do what I want rather than deal with the XOOPS interface. I only mention this as you specified easy usage for department heads to be able to do this.