I have applied the below fixes and it made 100% improvement. I did the below changes as I had upgraded from Office 2003.

We have the fix for you.
Part of the issue comes from upgrading from Outlook 2003 or earlier because Outlook 2007 uses your account settings to create new ones for you. When you upgrade to 2007 you will need to locate four .DAT files and rename them…
STEP 1: Turn off Outlook 2007 and Locate these files
For some reason, during the upgrade these four files can become corrupted – the migration from 2003 to 2007 isn’t the smoothest but not having to create all your POP3 accounts again is excellent.
1. extend.dat – you will find this file in the location | Drive Lettter:\Documents and Settings\user-directory\Local Settings\Application Data\Microsoft\Outlook\extend.dat //change it to extend.old
2. views.dat – may not find it most of the time
3. frmcache.dat – Drive Letter:\Documents and Settings\user-directory\Local Settings\Application Data\Microsoft\FORMS\FRMCACHE.DAT //change it to FRMCACHE.old
4. outcmd.dat – C:\Documents and Settings\user-directory\Application Data\Microsoft\Outlook\outcmd.dat //change it to OUTCMD.old
STEP 2: Restart Outlook 2007
1. Send yourself some test emails and watch the messages appear.
We contacted Microsoft Office 2007 support and workshopped this fix with them. They did not hear of this problem until we made first contact. Together, with the help of their support team (merv m. specifically), we found this simple solution above in a matter of 40 minutes. I was very impressed with their willingness to work through a fix together.
As of today, they do not have plans to create a patch for this small bug but they are gathering bug fixes for a future service pack down the road. Right now (MS said) their focus is building a service pack for VISTA’s bugs.