The problem does seem to be 12.1 as the Intel Mac running 12.0.1 does not have this issue with Outlook search function. Agree, Apple needs to fix this. BTW, at least on the M1, I may have brought the issue on myself, because as of writing, the system updater disallows updating. I forced the update using this convoluted procedure 1.) Open System Preferences > Software Update. Confirm that no update is available, and leave the window open. 2.) Open Applications > Utilities > Activity Monitor. 3.) Go to View > All Processes 4.) Search for 'com.apple.MobileSoftwareUpdate.UpdateBrainService' . Select it and click Force Quit. 5.) The 12.1 Update should appear in System Preferences. Click Update Now. 6.) The update will appear to download but it won't- 7.) force quit the com.apple.MobileSoftwareUpdate.UpdateBrainService again using Activity Monitor to start the download.

There is an extra space before "d1"... Search works when indexing restarts (just as it does with the defective 12.1 / outlook combo but then fails midway. Alas, Apple needs to chime in. As I said earlier MS is trying to force users to use 'New Outlook' which is not acceptable for anyone working for a few years and wants to keep a record of emails sent and received