For some unknown reason, Outlook began to error when I attempted to dismiss the reminder item. After doing some research, I discovered the following Microsoft knowledge base article. The solution is to browse to the MS Office install directory via command prompt, and run the following command:  "%ProgramFiles%\Microsoft Office\Office12\Outlook.exe /Cleanreminders".

If that doesn't work, then start Outlook, go to Calendar, click on "View", then "Current View" and finally select "Recurring Appointments". Remove the item in question to get rid of the error!