I have same symptoms, except that it at first worked for a week or so, at least initially got synced. Have many tasks there, and appears to have gotten hung trying to send a deny/accept for an event that already got deleted in iCal. So not a Lion issue.
Went to ~user/Library/Calendars and deleted Calendar.Cache file. That cleared the errors about "unable to send accept, account cannot be modified". No apparent errors in iCal, but doesn't appear to be syncing.
Anyone know how to tell when iCal is syncing with Exchange?
Pulled my Console logs for "iCal" string, get the following:
11/4/11 12:30:15.713 AM iCal: error = Error Domain=CalExchangeErrorDomain Code=-18 "iCal can’t decline the event “Canceled: Updated: Program Review Meeting” on the Exchange server." UserInfo=0x7ff7cc145150 {CalFailedOperationKey=<CalExchangeCreateResponseOperation: 0x7ff7cb9e6050>, NSLocalizedDescription=iCal can’t decline the event “Canceled: Updated: Program Review Meeting” on the Exchange server., NSLocalizedFailureReason=The account "PAC Exch" currently can’t be modified. To discard your changes and continue using the version of your calendars that’s on the server, click Revert to Server. To save your changes on your computer until the problem is resolved, click Go Offline.}
.... [cleared the cache, and restarted]
11/4/11 12:34:57.175 AM iCalExternalSync: -[CalManagedObjectContext context:shouldHandleInaccessibleFault:forObjectID:andTrigger:] Inaccessible fault: [<CalManagedEvent: 0x4010f9e00> (entity: Event; id: 0x4010f66c0 <x-coredata://C1804426-485D-4AD9-B33F-946D655EE518/Event/p4992> ; data: <fault>)] for objectID: [0x4010f66c0 <x-coredata://C1804426-485D-4AD9-B33F-946D655EE518/Event/p4992>]
11/4/11 12:34:57.175 AM [0x0-0x97097].com.apple.iCal: 2011-11-04 00:34:57.174 iCalExternalSync[2888:707] -[CalManagedObjectContext context:shouldHandleInaccessibleFault:forObjectID:andTrigger:] Inaccessible fault: [<CalManagedEvent: 0x4010f9e00> (entity: Event; id: 0x4010f66c0 <x-coredata://C1804426-485D-4AD9-B33F-946D655EE518/Event/p4992> ; data: <fault>)] for objectID: [0x4010f66c0 <x-coredata://C1804426-485D-4AD9-B33F-946D655EE518/Event/p4992>]
11/4/11 12:36:57.488 AM iCal: removeEntity failed: can't find CalendarItem
11/4/11 12:36:58.516 AM iCal: removeEntity failed: can't find CalendarItem
11/4/11 12:36:59.605 AM iCal: removeEntity failed: can't find CalendarItem
11/4/11 12:37:10.185 AM iCal: removeEntity failed: can't find CalendarItem
11/4/11 12:37:14.759 AM iCal: removeEntity failed: can't find CalendarItem