I've got exactly the same issue. OS Monterey 12.1 Outlook Mac 16.56. I also tried to rebuilt the indexes using instruction from Microsoft website and during the rebuild I could search but once it finished there were no results found. Strange thing is that I've also noticed the same issue on Windows 10 using Outlook 365 (e.g. I've been searching for a work email which I knew contained certain phrase and it was never found so I ended up trawling through folders and found the email which had the exact phrase I'd searched for). So, it leads me to believe it's more a Microsoft issue.