Look for the following entries under HKEY_CURRENT_USER\Software\Microsoft\Office\12.0\Outlook\AutoDiscover
and remove them.
"PreferLocalXML"=dword:00000001
"ExcludeHttpRedirect"=dword:00000000
"ExcludeHttpsAutodiscoverDomain"=dword:00000001
"ExcludeHttpsRootDomain"=dword:00000001
"ExcludeScpLookup"=dword:00000001
"ExcludeSrvLookup"=dword:00000001
"ExcludeSrvRecord"=dword:00000001
Note: Save your registry before making any changes.
This applies to Outlook 2007 with Exchange server 2007.
The problem occurs when "Microsoft Online Services Sign In" application is installed.
It may also apply in other circumstances where a plugin also makes such changes.