I started having the same issue yesterday on 2 workstations. It seems the latest Office 365 update from June 13, 2017 Version 1705 (Build 8201.2102) is the problem.
Rolling back Outlook to an earlier version (16.8067.2115) appears to have corrected the problem for me too.
As you've discovered, unfortunately there are some known issues with the latest version of Office affecting the Act! Outlook integration.
There is a KnowledgeBase article (for a slightly different issue, but the root cause is the same) detailing affected versions.
The most affected version is 16.0.8201.xxxx - this being the most recent update Microsoft have released, though we have seen some issues on lower versions as well as detailed in the above KB.
We are currently recommending a revert to 16.0.4229.xxxx which is confirmed to be fully working as of the latest testing, though as you've seen you may have success rolling back to other versions as well.
This is an issue we're currently tracking, and we're gathering as much information on this as we can, so thanks for your patience while we work on getting this resolved.
I have rolled back to 16.0.8201.xxxx and I can now again send an email from within Act using Outlook however the record is not automatically attaching to my contact history like it used to. When I use the Add-ins tab in Outlook I can attempt to "Attach E-mail to contacts" manually but I get the error "Act.outlook.service has stopped working".
I will take the opportunity while I have your attention to ask about a kind of related issue which I believe has been unresolved by you guys for quiet some time, it bugs be nearly every day of the week so please advise on progress towards solving...
Embedded pictures also appearing as attachments when using Outlook (2016) via Act to send an email from a template.
With regards to the images being attached to mail merges - this is unfortunately another ongoing issue.
We are still looking to find a resolution for this, I know it was recently fixed for some versions of Office, but I do believe that Office 2016 is still outstanding in this respect.
If you'd like to keep abreast of any developments with regards to this, there is a thread on the forums here which is kept actively updated with any news on this issue, here.
In regards to the issue where images are appearing as attachments in mail merges, we've been working on this issue for some time, and have resolved the issue for users of Office 2010, however weve identified that more significant changes are required to resolve this for users of Office 2013 and 2016. These versions have a very different underlying cause for the problem.
We do have a few further avenues to explore in terms of 'fixes' to the issue. Beyond this however, a full rewrite of the feature will need to be planned. I'll be clear that this will not be a quick process, as we would need to ensure as much parity with the existing functionality as possible, and minimum disruption to customers with existing custom templates.
Work on this issue is ongoing as part of our current Act! v20 project, although we plan to create an earlier update we can make available to customers, We do however need this first stage of work to complete before the feasibility and timescale of an update can be determined.
I appreciate this is very frustrating, and we are looking at options to accelerate the above work. thanks for your patience.
