CDaze Notes

For this particular situation you must have SpyBot installed with immunize protection for IExplorer or some other anti-spyware program that blocks website URLs.  This shows up after MicroSoft windows update does a critical security update for IExplorer 7.  KB933566  Searching the support groups the problem is widely known but MS has yet to publish a fix.   If you have Outlook 2007 installed this is not a problem.  Guess MS wants you to upgrade to Outlook 2007 instead…
The problem starts when Outlook tries to open or create a new email message in HTML format.  If you create a new message, soon as you type a letter nothing happens for several seconds after you stop typing.  A few seconds later your letters appear.  Your CPU will be at max usage while this happens.  If you have Word installed, you can change Word to be the editor for HTML emails.  This will stop the hanging when you create a new message from Outlook but opening a new email in HTML will still hang.  Using shortcuts to send attachments will still use the Outlook for creating the new email even with Word is set for default.   Converting all your emails to text or set Outlook to read them as text will stop the hanging.
The cause is from a new security feature ‘bug’ to make Outlook check the restricted zones list for IExplorer looking for blocked URLs in the email.   SpyBot dumps a huge list of websites in the restricted zone, for some reason every letter you type Outlook is checking this list again and again.  If you have an AV program like NOD32, the IMON module is looking for these sites.  You could disable the immunize option in SpyBot.  If you are a FireFox or Opera user, they do not use that list anyway.  Make sure Outlook is not running if you make changes to remove that restricted zone list.  Oddly, it was posted you can add the list back to the zone after Outlook is running without the hangup.  Also found posts saying changing the default group to anything other than Mail or Inbox when Outlook opens can fix this, like Calendar.  Outlook 2007  does not have this problem because it does not use IExplorer’s rendering engine for HTML emails.  Setting the security zone for Outlook to use Internet zone instead of Restricted zone the problem goes away but then you are not blocking much of anything. 
I grabbed the full installer for IE7 which wipes out all the updates and patches before it re-installs IE7.  This clears out all the problems also but then you are running vulnerable to critical IE7 bugs.  I am sure there are other ways to get around the issue till/if MicroSoft fixes the problem. 

 *update*
It seems with SpyBot 1.5 this problem is no longer affecting my machines.  One noted difference, SpyBot is using hosts file for ‘bad’ website domain names.