Mac Outlook 2011 weirdness replying to text messages on MacBook Air running Mt Lion

I'm running Mac Outlook 2011 (with all updates applied) on Mountain Lion, on a new MacBook Air. When replying to a text message, I type something like "I'm" and after hitting the spacebar, the word turns into "I'M" and the cursor goes somewhere out of the message. This happens elsewhere too in the text if I fix the aforementioned text. I did not have this problem before Mt Lion or with my previous 2nd generation MBA.