Yes, that white arm off to the right in the photo can be used to set, or release, the lock. But the lock only determines whether or not the outside handle will open the latch. On my 07, moving that white arm down, releases the lock; then the handle on the outside should work if the mechanism is intact.
The external handle is connected to the latch mechanism by a cable. It's possible the cable has failed, which would render the handle ineffective. (See attached.)
But what exactly is the problem? Is it that the door latch mechanism appears to remain locked all the time, or is it clearly unlocked (the action can be heard when using the keyless entry remote, and then there's the manual lever) but the handle still doesn't work?
A not uncommon problem is a broken wire going to the rear hatch that prevent the keyless entry system from triggering the lock actuator and unlocking (or locking) the latch. There's a number of posts and threads relating to the wire breaks; here's one:
http://www.subaruoutback.org/forums/66-problems-maintenance/12794-05-hatch-lock-problem.html