Search broken

Yep, we have the same problem, apparently search in Outlook is bugged right now. As you said the workaround is in the registry, only if you don't use group policy you have to go here: \HKEY_CURRENT_USER\Software\Microsoft\Office\16.0\Outlook\Search\ and create a DWORD registry DisableServerAssistedSearch and DisableServerAssistedSuggestions and set their values to 1. It then skips searching exchange/office365 and only looks in your cached emails.

Hopefully MS is going to fix this soon.