Apple Watch indoor running error in calculating distance
There is no such thing as calibrating WATCH Series 2 for outdoor use, since it has an onboard GPS receiver that is always active during outdoor run/walk/swim activities.

When you run outdoors, you are calibrating your WATCH Series 2 for indoor use. This requires using the default Workout app, with a good GPS signal (clear line of sight to the satellites), for at least 20 minutes.

For best results, Apple recommends running for at least 20 minutes, away from tall trees and buildings, preferably on flat terrain.

Repeat this process for various running paces. If you run a 12-minute mile during calibration, running a 9-minute mile indoors will yield inaccurate distance estimates.