Using Classic Outlook on Windows for personal email, calendar, and contact management
To fix a grayed-out hyperlink icon in Outlook for Windows, you usually need to change the email format from Plain Text to HTML, because Plain Text does not support hyperlinks.
For the current email, open the draft message and click the Format Text tab on the ribbon. Change the format from Plain Text to HTML. The hyperlink icon should then become active.
To change the default setting in Classic Outlook, open Outlook and go to File > Options > Mail. Under Compose messages, change Compose messages in this format to HTML, then click OK.
As a quick alternative, type and highlight the text you want to turn into a link and press Ctrl + K to open the Insert Link dialog directly.
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hth
Marcin