Why are some members not appearing in the membership directory?
The rules Sumac uses for putting someone in the directory are different for top level directory entries (e.g. an organization) and for secondary level entries (someone who works for the organization). Regarding top level entries: When you create the directory, it asks for which types of contacts are to be included in the directory, and you can tell Sumac to include contacts based on membership information, and whether you have manually specified that a contact should be included in the directory (by clicking the Include in Membership Directory checkbox in the Membership Directory tab of the contact record). In addition, to be included, a contact must have a membership contact type specified. Membership contact types are checkboxes in the Membership Directory tab of each contact record. Confirm that the organization missing from the directory has a relevant contact type checked off in the Membership Directory tab.
Secondary entries must be related to top level entries by a relationship whose name (in the Administrator Lookup Lists window) starts with md. Check that this is the case.
Should I use the Inactive checkbox in contact records to indicate that someone is no longer a member?
Generally you should not use the inactive checkbox to indicate that a membership is no longer current. If a member contact lapses, then there would be no current membership record for the contact which, by its absence, indicates that the contact is no longer a member. The Inactive checkbox indicates no further relationship of any sort is likely with a contact. But a lapsed member may become a member again in the future, or may even be a current donor or attend current events.