With DialDictate you can use the mp3 codec. But you cannot make .mp3 files.
The confusion here arises because 'mp3' actually means the type of code but many laymen think it means the file extension.
The reason why DialDictate uses .dct on mp3 compressed files is that .dct files can be encrypted (a requirement for medical or legal use) whereas .mp3 files cannot.
What service provider are you using?
Many 'codecs' are supported under SIP. But the SIP specification mandates all SIP connections must support type 0 uLaw to be able to call itself SIP. It sounds like your company is not providing type 0.
Version 4.04 of Express Scribe has just been released.
Many new improvements in better slow speed handling, improved user interface and much much more. It is still free of course.
Download here:
ftp://ftp.audiochannel.net/software/es.zip
With Express Talk you setup to link to the VRS directly (not through any sound adapters).
Have a look at the Recording Calls option in the Express Talk manual.
For support for customers who have not software you can buy a support contract at: www.nch.com.au/support.
Not only do you get a phone number you get your own tech contact.