Many seem to be confused about Outlook folders and the method in which Outlook is or should be installed. I'd like to clarify some of that here and now. I am not a mail administrator, but I know the client side (YOU) pretty well.
Go to Help->About. Does it say Corporate Workgroup (CW) or does it say Internet Mail Only (IMO)? Another way to tell is if you hit Tools-Services (CW) or Tools-Accounts (IMO). If you have both an Exchange server AND an internet mail account, you'll have Tools-Services, and you'll see Internet Mail as one of the services. You can ADD this service to get your yahoo or other POP3 email and receive it at work. You'll want to make sure that you tell it to leave copies of the emails on the server so that you can read them again (and they'll download to your PC) at home. Your company MAY let you get away with collecting POP3 mail at work. Don't be surprised if you can't make it work.
Corporate Workgroup (CW)
The CW install is, in general, used at work when your company has a mail server, and that mail server is usually an Exchange server. Exchange is the name of the software provided by Microsoft for the purpose of storing and distributing emails both in and out of the company. A mail server is nothing more than another network computer (server), but its purpose is strictly for mail use. When you get the message "Cannot open default mail folders" and you're using CW, inevitably, this means that the Exchange server is down. Try to connect later, which requires you restart your PC--virtually all failed network connections require a restart to connect again.
This type of installation allows you to share folders (calendars, inbox, etc.) with other users on the same Exchange server. It may also allow you the use of the Out of Office assistant. Why? Because the Out of Office assistant is a "server-side" process. It will send that Out of Office message whether your PC is turned on or not--the Exchange server does it for you. You may notice when you set up other rules that you're asked whether it should be server- or client-side. Client side rules will only run when YOU open Outlook.
Internet Mail Only (IMO)
This is generally what's used at homes or at companies that don't have enough employees to bother with an exchange server. This type of install uses POP3 (your internet service provider's mail server--also called a post office) to send/receive mail.
Note that you cannot use the Out of Office assistant if you have IMO. See the CW for more info on that option.
Note that you will have great difficulty sharing folders and you cannot create "public folders" with this installation. See the CW for more info.
You can create personal folders using Tools-Services if you have CW, or File-New-Folder with IMO. What's the difference? IMO ALWAYS uses personal folders--they're on your hard drive. These folders have a *.PST extension whether at home or at work. At work, your PSTs may be on a network share (but not the mail server) or on your hard drive. This is set by your IT staff or by you. If you are CW, and you keep getting messages that your mailbox is full, then you'd better create yourself some personal folders and get your mail off of the server folders (Outlook today) and into your personal folders.
A personal folder in Outlook is just one folder. It may have many subfolders inside. Your personal folder "could" have two names, i.e., the name of the PST file that you give it, and then the name you want to see in Outlook. When you create them under Tools-Services, you're giving the opportunity to provide both of these names. To avoid confusion, make them both the same. Many people leave the default name for the folder and end up with a folder called "Personal Folders". How unique! Personal folders have a max size of 2 GB. You'll want to create a new one after 1.5 GB (Dreamboat's suggestion).
Also, if you create subfolders of personal folders, they do not have their own PST file, they're all in the ONE file. At home, your personal folders are usually outlook.pst, and it's usually ONE file.
Offline folders are different from personal folders. When should you use offline folders? When you do a lot of work on your laptop from your home or car or plane or hotel. Offline folders are synchronized with the Exchange server folders. What does that mean? It looks JUST like you're online when you're not. Your offline folders are what I like to call an "image" of your Exchange server folders. You synch at work, you go home, and it looks like you're at work. If you're NOT dialed in or otherwise connected to your exchange server, any mail you send will sit in your Outbox until you do connect. Many companies allow remote connection to their Exchange servers. Many do not. Ask your mail admin. Anyway, Offline folders are *.OST files, usually Exchange.ost, but you can call them what you want. This is done under Tools-Services, select the Exchange server and hit Properties. You'll also want to go to Tools-Options, Mail delivery (I think), and tell it to synch your offline folders upon exit. That way, you should always have your OSTs matching your Exchange server AT THAT TIME. Once you log in, you'll be seeing your Exchange server stuff. There's nothing different looking, except the additional mail or other items, so people get confused about it. You'll want to synch the Global Address list frequently too.
If you have DSL or cable (constantly connected to the internet) at home, and you use a desktop (not a laptop) at home, then there's no real point in having Offline folders. Be careful about pulling stuff from Outlook Today into your personal folders at home, though!
Please, if I've missed anything you feel is relevant, comment on my FAQ so I receive a notif.