If you are detecting packets drops on the server, then it is
usually an indication that flowcontrol should be enabled. However,
flowcontrol needs to be enabled on both ports. If you cannot enable it
on the nic card of the server, then turn it off on the switch side.
Other than this, you may want to look into possibly using a different
nic card in your server.
The output drops are the number of packets dropped because the output queue is full. A common cause of this might be traffic from a high bandwidth link being switched to a lower bandwidth link or traffic from multiple inbound links being switched to a single outbound link.
http://www.cisco.com/en/US/products/hw/switches/ps700/products_tech_note09186a00801751d7.shtml#topic3