You are using Outlook for Windows? I put off answering this because I wanted to test it with the newest build of Outlook for Mac (that was released for Office 365 subscriptions) and when i re-read it, I realized that it sounds like you are using windows - and either outlook 2010 or 2013 (outlook 2011 is mac only). I don't think i need to test it that...
Something happened to the TNEF blob - first, go to File, Options, Calendar - is the option to send icalendars to internet addresses enabled? Sending as icalendars should work as it doesn't use TNEF data.