I just had this problem....an hour and a half later my wife came in and figurerd it out. Do not close outlook. If you have upgraded to Lion, the Library is no longer viewable. Very simple now!!
- open finder
- Go to the "GO" drop down menu and hold down the option key. (next to the command or apple key)
- The "Library" option will appear between the "Home" and "Computer" options in the same "GO" drop down menu
- Click on "Library" and you are in..then you will find "Cache" and then "temporaryitems" and Eureeka!!! The outlook temp folder is in there and your troubles are over!!!