According to SitePoint Tech Times #156, based on these 2 articles from Microsoft, Word 2007 HTML and CSS Rendering Capabilities in Outlook 2007,

,"Microsoft Office Outlook 2007 uses the HTML parsing and rendering engine from Microsoft Office Word 2007 to display HTML message bodies. The same HTML and cascading style sheets (CSS) support available in Word 2007 is available in Outlook 2007."

The limitations imposed by Word 2007 are described in detail in the article, but here are a few highlights:

* no support for background images (HTML or CSS)
* no support for forms
* no support for Flash, or other plugins
* no support for CSS floats
* no support for replacing bullets with images in unordered lists
* no support for CSS positioning
* no support for animated GIFs

In short, unless your HTML emails are very, very simple, you're going to run into problems with Outlook 2007, and in most cases the only solution to those problems will be to reduce the complexity of your HTML email design to accommodate Outlook's limited feature set.

Read the full article at SitePoint