Thank you zkiller for all the help and tips.
I have found the answer

. For all who were following this thread and future users who will search for this, here is how to send an HTML Newsletter in Outlook:
1. After you have designed the newsletter using whatever method you choose and you have an html file saved,
2. In Outlook, go to tools > options > 'mail format' tab
3. Send in this message format: HTML
4. Click the Stationery picker and create a new one. Name it and pick your html file as a template.
5. Then send the email by going to actions > New mail message using...(your created stationery).