Besides the OLYMPUS ZUIKO lens, what other manufacturer makes lens that are affordable and compatible with the Olympus E- Series camera bodies?

sigma makes lens, leica will also work because panasonic also uses the 4/3rd's system. here go here...http://www.four-thirds.org/

Will the lens fit directly onto the camera body or is it necessary to use an adapter ring ?

they will fit directly on the camera

All 4/3 lenses will fit on all 4/3 cameras. Olympus, Panasonic and Leica worked together in developing the system. There is also now a micro 4/3 standard. regular 4/3 lenses will work on them with an adapter.

Right now only Olympus, Leica, and Sigma make 4/3 lense. The Sigmas are generally less expensive than equivalent Olympus or Leica lenses. If you've been around cameras long, you'll know why.

You can also get adapters to allow you to use your 4/3 camera with almost any "legacy" 35mm manual focus lens. This includes Olympus OM, Nikon F, Leica M and many others.

So anyone tried the Canon FD->4/3 adapters? My dad owns a Canon AE-1 with three FD mount lenses...

To Clarify:

Only Olympus, Panasonic, and Sigma make 4:3 lenses. Leica has yet to produce anything in the 4:3 category that is truly their product (the Digilux 3 notwithstanding). The lenses currently out with the Leica badge were designed and produced by Panasonic with Leica approving all specifications. As an aside this includes all the Leica D-Lux, C-Lux and V-Lux DSC models. Also, at this time, it is safe to say that Leica has nothing on their current nor short term plate for 4:3. They have not officially pulled out of the coalition, the rest of the companies have too many technologies that Leica would really need to license from... but they're really not playing ball.

However, there is one unique adapter that one can get from Leica, though it would be best to contact a Leica dealer and deal directly with their Leica representative to get it.. and that is the R-System to 4:3 adapter that allows all of Leica's (now-discontinued) superb R-system series lenses to be used on any 4:3 body.

The Canon FD - 4:3 adapter appears to work fairly well with a couple caveats.. 1.) the occasional lens cannot QUITE get to infinity and 2.) there is no such thing as focus confirmation with this adapter. Be prepared to squint or stop down a bit. Live View can help here, with the on-screen magnification... Just don't expect high speed photography to take place!!

The Nikon F adapter has worked very well and is in use by many photographers. The OM adapter can be ordered directly through Olympus or through an E-Systems Premier Dealer. I use mine for mounting to T adapters and scopes.

You sure seem to know a lot about Olympus cameras. Do you work for the company or are you a general consumer who shoots with Olympus cameras?