i verified that you are the system Admin , so you should be able to configure the client for CRM Online. The behvior which you are seeing is unexpected. once you will select CRM online from the configutaion wizard DropDown and click ok you will prompt for authentication , where you may supply your Login infirmation and then it will give you ORg your account is accociated with , after selecting that when you clieck on this will show a Green status bar , once that complete you can open the outlook and wait for soem time for the outlook addin to laod and then you can navigate thought.
Coudl you please confirm if you can access the CRM from the same machine from IE without anu isssues.
if yes, Please go ahed and uninstall the CRM 2011 outlook client from the add and remove program, reinsatll that from the Download bits availbale at internet and then try to configure the org.
You may refer the following URL:
social.technet.microsoft.com/.../11752.dynamics-crm-2011-outlook-client-uninstall.aspx
www.microsoft.com/.../details.aspx
www.microsoft.com/.../details.aspx
www.nealabc.com/.../Microsoft-Dynamics-CRM-2011-Outlook-Client-Remove.aspx
Thanks,