I'm having a similar problem and I searched and found your post.
Here are a couple screenshots:
The overall structure of my outline. "TRANSFERS" and "EVALUATIONS" are top-level folders. Below those are the names of students. (Student names blurred). Below the student names are my task items.
The below screenshot shows my NAsForOutlook saved view. You can see the Outlook Sync Options. I'm getting the same problem as the person who started this thread. Interestingly, the top level folders "TRANSFERS" and "EVALUATIONS" never appear to get synced over. The level-2 folders (with student names) do get synced though. It is also interesting that SOMETIMES the thing works as expected, but mostly it is erroneously putting in the parent folders into my Outlook todo list. I thought it might be because of the setting "Encode MLO project name," so I tried turning that off to see if it would make a difference. It does not.
I see that there is an outlook sync log here: C:\Users\StephenK\AppData\Local\MyLifeOrganized\Logs, but I can't post it because of all the student names.
Does anyone have ideas on what to try?
MLO for Windows 5.1.1 Pro.
About Microsoft® Outlook® for Microsoft 365: Microsoft® Outlook® for Microsoft 365 MSO (16.0.13127.21210) 32-bit
Win 10.