We have a ticket on this but we haven't been able to find a way to stop Outlook from the local user authentication attempt. One potential workaround that may help is to whitelist the IP to prevent the IDS blocks, though only if the IP is static. Other than that, nothing else seems to work.
We're waiting to hear back on whether disabling NTLM using GPO works or not.
Derek Curtis
COO
SmarterTools Inc.
www.smartertools.com