Office diagnostics will repair some problems but is mostly useless for serious problems, however, you can use it as it does no harm and may fix your problem. just don't get your hopes up - it's not an "end all, be all" solution for all problems plaguing Outlook. Doing a repair is generally better although it takes longer and you may need the Office installation source handy.
Repair Office 2007 Installation
To repair your Office or Outlook installation, open the Control Panel and locate Add or Remove Programs. If you are using Windows 7 Category view of the Control Panel, choose the Uninstall a Program link under Programs category. In all versions of Windows, you can also type add remove programs in the Search field to find Add or Remove Programs.
Locate your Microsoft Office install in the list of installed programs. Select it, then choose Change. If you are using Windows 7, the Change button is above the list of installed programs (as seen in the screenshots for Outlook 2010 on the previous page.)
Choose Repair on the next screen and click Continue.
Run Office Diagnostics
Expand the Help menu and choose Office Diagnostics to start the Diagnostics wizard.
While the diagnostics are running, the dialog updates with the results:
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