Found the solution here: http://www.computer-aid.com.au/blog/2009/07/09/outlook-this-operation-has-been-cancelled-due-to-restrictions-in-effect-on-this-computer/

It was the last step that did it

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Somehow I have disabled the capability to click on a hyperlink mentioned in an email and automatically open page in browser. It was probably while uninstalling chrome and chrome gears. I have since installed Chrome back but no cigar.

Any suggestions?

TIA,

Alex