Strange indeed. I'm unable to reproduce this here - it works as expected (no bluring). I have ClearType and edge smoothing enabled... 
Are you using Outlook 2003 to test? That's the only place I get the problem. I also get the same thing on my laptop - again, in Outlook 2003 only, but it's a different graphics adaptor and resolution.
Apologies - correction, this does NOT happen on my laptop! Settings are the same re Cleartype etc, just a different graphics adaptor. The only difference between the two is that I had the Avast Pro trial installed on the desktop prior to 'dropping back' to Home, but I can´t imagine that anything left over from Pro in the registry would affect anything - clutching at straws here! I've installed the latest Nvidia drivers on my desktop this evening but that´s had no affect at all. Scratching my head thinking about anything else I might have 'tweaked' but can't think of anything - it was just the Menu speed in TweakUI that had upset the menu issue I had before - solved by 'Tech'. So, hmmm any other ideas? Why just Outlook...??
I've solved (?) it!! If you notice from my screenshots, I have the Windows colour scheme set to silver rather than the default blue (Display Properties). I switched it back to Blue - and...no more blurred text on the Avast Delete message in Outlook! Bizarre!! So, hopefully you can now reproduce this by switching your colour scheme to Silver in XP...
However, this is clearly a small bug of some sort - it happens with
all skins, and...changing my colour scheme in Windows shouldn't prevent an application from displaying it's messages correctly. A fix would be nice, but in the meantime...I'll live with Blue!!