All this advice is really helping. I guess I will just try out a few things before school starts and see what I like best and use omnioutliner for outlining. The only reason I have asked about Microsoft office is because someone told me that it crashed on their Mac and that it was a resource hog. Any thoughts?
My BF has the older one and I've seen it not work for him several times. I have Word 2008 for Mac and I haven't had any issues yet. I've used Excel, Word, and Powerpoint and haven't had problems with any of them. I actually really like Word 2008. I was afraid it would be difficult to get used to the interface but it turned out to be fine.
As far as outlining goes I would suggest download a couple of the free trials and trying them out, as well as Notebook view in word. Circus Ponies Notebook had a 30 day trial I think and I don't remember about OmniOutliner, but they are pretty different so trying them out should give you a chance to see which one fits your style better.