Sending, receiving, and organizing email in Outlook.com
Possible Workaround - If Outlook is using a non-English language
Following a similar thread on Reddit where user Darewelll posted about a workaround that fixed it for him. Don't know if this applies to the cases reported here.
my Outlook account was set in French [which seems to cause iOS to not recognize the Junk folder as special, but only as a normal folder]. So everything flagged within that folder was still shown in the "flagged" category, because iOS doesn't realize it's junk. I switched my Outlook account to English (US), and now iOS correctly recognizes the junk folder, and everything flagged within that folder is not shown anymore in the "flagged category". In the end it doesn't really fix the "high importance" junk being flagged but at least it is not shown anymore in my "flagged" category on iOS.
This is the discussion who helped me, the guy had the same issue but with the German language.
[External Non-Microsoft Site] https://discussions.apple.com/thread/255817358?sortBy=rank