Somehow the PST file that holds your emails and contacts info has lost connection with Outlook. Select "Open an existing personal folder file. Choose <yourusername>.pst. If it fails, choose another pst.
If again failure, choose to create a new PST file. Outlook will open and you will not have any emails or contacts.
Run ScanPST to repairdamaged Outlook PST file
How to repair Outlook folders using the Inbox Repair Tool
PST file is located in C:\Documents and Settings\<user>\Local Settings\Application Data\Microsoft\Outlook folder. It is a hidden file, so you have to unhide hidden files. Open Windows Explorer folder and select Tools > Folders Options > View. Check "Show hidden files and folders". Click OK.
Hope this helps.
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