To display Lightning Web Component in Outlook Salesforce Panel, target lightning__Inbox should be used.

1. Create a Lightning Web Component.

Sample Lightning Web Component:

HTML:

<template>
    Testing Lightning Web Component in Outlook
</template>

JavaScript:

import { LightningElement } from 'lwc';

export default class OutlookComponent extends LightningElement {

}

js-meta.xml:

<?xml version="1.0" encoding="UTF-8"?>
<LightningComponentBundle xmlns="http://soap.sforce.com/2006/04/metadata">
    <apiVersion>55.0</apiVersion>
    <isExposed>true</isExposed>
    <targets>
        <target>lightning__Inbox</target>
    </targets>
</LightningComponentBundle>

2. Enable “Customize Content with App Builder”. Click “Create New Pane”.

3. Add the Lightning Web Component in the App Builder and test it.

Output: