Using older versions of Outlook for Mac in business environments
Final update:
Update to Mavericks to resolve this issue.
The problem is related to webkit. Webkit is a component of OS X (it is the HTML rendering engine behind Safari). The bug was reported to Apple shortly after this thread started. The fix was released recently in the version of webkit included with Mavericks.
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As a temporary workaround please turn off the "Capitalize first letter of sentences" autocorrect setting.
Select the menu Outlook, Preferences, Autocorrect and uncheck "Capitalize first letter of sentences".
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Update:
The recent Mac Office 14.2.5 release did not contain a fix for this issue.
The problem is related to webkit. Webkit is a component of OS X (it is the HTML rendering engine behind Safari). The bug was reported to Apple shortly after this thread started and we are eagerly waiting on a fix.
Apple released version 6.0.2 of Safari early November 2012, including a webkit update. It is that update which is causing people to see changed, but not fixed, behavior.
The particular test case I have been using to reproduce the problem still fails with Safari 6.0.2. Other uses are reporting that situations which were broken before now work.
There is no benefit in trying new identities or new user accounts. The issue is well understood as being a webkit regression from when Mountain Lion was released. It is not related to any problem with your identity, account or installation.
The above temporary workaround is still the only solution to suppress the problem until a complete webkit fix is released. Updating to Safari 6.0.2 through Apple Software update may address some situations.