After spending days finding a fix for Outlook 2010 – (Post here) I found some Outlook 2007 clients that were throwing the same error
The KB Number is – KB2596993 downloads can be found here KB2596993
Also check out my previous post about delegated mailboxes, you may find the two issues are linked.
Additionally if I leave as it is for hours, and rebuild the outlook profile. It will work as well. So, that tells me something refresh after certain time that IISreset does instantly.