1. Outlook 2011 and the entire Office suite is already up to date. I checked this before posting here.
2. When changes are made in Outlook there are not reflected in OWA. Outlook stops pushing it's changes to the server.
3. Like I said in the original post - rebuilding the identity fixes the issue for a week or two then it fails to sync again. Rebuilding the identity every two weeks is not a valid solution. I need something more permanent.