Outlier detection on categorical network log data
Foremost, in my opinion categorical data should not be converted to continuous format at all. This is statistically incorrect.

Second, if a categorical data say Sex with two levels Male, Female exists then it can be written as 1,2, but, it should be specified that these numbers are to be treated as nominal and not continuous.

Continuing further, one method of detecting outliers in categorical data is to calculate the frequency of the data points and then average each such obtained frequency to the total number of data points. The data points with the minimum frequencies can be considered as outliers.

You might find this paper and this SO post implementation in R interesting.