Using New Outlook on Windows for personal email, calendar, and contact management
In new Outlook.
Navigate to Settings > General > Privacy and Data > Privacy Settings.
Enable Turn on experiences that analyze your content.
This fixed it for me. No idea how that setting got changed or if its new or something.
This is super shady....because you have to forfeit your privacy to use Editor. But it worked. Editor now spell checks and is not greyed out in the New app.