As I understand it, Outlook is looking for a SentMail folder (no spaces)?

Delete the "Sent Mail" you created and and instead of trying to give him a new one:

Right-click on the Spectrum top level folder -> IMAP Folders
On the IMAP Folders dialog [Query]
On the "All" tab, select and [Unsubscribe] from anything that looks like "Sent".

And set:
[/] When displaying hierarchy in Outlook, show only subscribed folders.