There is no one definitive answer for this. In most cases it is caused by an incorrect or partially corrupt installation of Microsoft Office. Doing a complete uninstall and reinstall of Office usually fixes it. In other cases, it's simply a case of a dll that was not registered correctly during installation. This has worked for some people: http://support.microsoft.com/kb/870707.

Alternatively, you can also try using an older version (which uses a different mechanism to connect to Outlook).