How do I configure an archived Outlook folder
Maybe it is the terminology.

The Outlook has a "On my Mac" directory.

Those folders and emails reside on your Mac- you could call them Archive.

Consequently they are already archived since they are not obeying the IMAP rules and activity in the email folders (that are online folders).

So, just create a new folder name it Archive (or anything you choose) under the On my Mac, and drag emails from your emails folders under your account(s)and inbox in to it. That action will move the email from its current location (online) to your hard drive.