Dynamics CRM 2011 Cannot Go Offline - Hexadecimal Value is an Invalid Character

PROBLEM:
  • You are using Dynamics CRM 2011 or 4.0 Outlook Client
  • You cannot go offline and the offline process fails at "Waiting for offline database initialization" with error " '.', hexadecimal value 0x00, is an invalid character, Line x, Position x". 
  • None of the rollups fix the problem 

SOLUTION THAT WORKED FOR ME:
Remove offline filter for reports and try going offline again. To do this, in Outlook click CRM --> Offline Filters. Click the "Returned Type" column header to sort the list by entity, then delete any offline filters for the reports entity.

If this works, go online and add back the offline filter for reports, then try going offline again. It should still work but if not, it could be that one particular report is stopping the offline process. Review your reports and consider deleting any that that you have recently uploaded to CRM (if you don't already have a copy, make sure you download a copy of the report first!)

The above solution was found with assistance from here: http://social.microsoft.com/Forums/en/crm/thread/e97c6cb4-62f9-4aee-85ed-c80008ca245a


OTHER POSSIBLE SOLUTIONS: