I share your frustrations and I have had the same problem
since installing on Windows XP.  Today, after many hours
(some of them paid for with MS Support), I now have
functionality.

Here is what I did:
Go to this link:

http://www.microsoft.com/mspress/books/sampchap/6232.asp#1
04

Look at the Mouse Property section (5.3 and 5.4).
Using "Regedit.exe" and be careful if you do not know
about the registry settings!!! (Go to Run under Start
Menu and type in Regedit.exe), find the appropriate keys
and make the changes so that the registry values agree
with the defaults as noted in the article.

If you haven't already downloaded it, download TWEAK UI
(TweakUiPowertoySetup.exe) from MS

http://download.microsoft.com/download/f/c/a/fca6767b-
9ed9-45a6-b352-839afb2a2679/TweakUiPowertoySetup.exe

This allows you to "tweak" your mouse settings.

I think that the item you want to play with is
called "Hover Sensitivity" which I first jacked up to 32,
and made sure that the Hover Time was set at 400 which
fixed the Outlook problem . I then went back and reset
the Hover Sensitivity to 2 and voila then problem
dissappeared.

As usual...the problem is either not widespread or nobody
knows how to deal with it.  I have no idea how my problem
started or what caused it and apparently neither does MS!!

Good luck!!!