Just because it doesn't show mailto: doesn't mean the internet type is set to smtp. But if that isn't the issue I have some more questions to narrow this down.
1. Is it just this address or several that give this error?
2. What percentage of emails that you try have this error?
3. What is the primary smtp server and port you are using in your outlook settings?
4. Can you use IMAP instead of POP with your internet email?
5. Can you set up a gmail account and see if you have the same issue with the same addresses?