Thank you for all the suggestions. I belive I have finally resolved this issue. If you're like me and are a saver, the file "sent items.dbx" may have grown too large. Mine was over 2MB. Once I deleted this file, the problem of the OE outbox was resolved. Apparently, the file was not deleted from the OE outbox because there was not room for it in the "sent items" folder!
Now, finding the "sent items.dbx" file is not so easy. I.e., you won't find it on search because it is embedded deep and somewhat mysteriously. So, open OE and right click on the "sent items" folder. Left click properties. You will find the file location which is extremely long. Left click on it and drag your mouse back and forth to get the file name.
On my computer, the location was:
c:\documents and settings\owner\local settings\application data\identities\{registry reference}\microsoft\outlook express\sent items.dbx