How can I make all-day events default to a status of Busy instead of Free?
Because so many all-day events are holidays, birthdays, and anniversaries that don't affect your availability, Outlook automatically sets the status of any all-day event to Free. Outlook gives you no direct way to change this behavior.
A possible workaround is to create a custom all-day event form. Create a new appointment, then choose Tools, Forms, Design a Form to switch into form design mode. Select the (P.2) tab. From the Field Chooser, which will appear automatically, drag the All Day Event and Show Time As fields onto the blank form page. Right-click the All Day Event check box, choose Properties, then switch to the Value tab. Under Set initial value of this field to, type
into the box for the value. Click OK to return to the form. Next, right-click the Show Time As combo box, choose Properties, then switch to the Value tab. Under Set initial value of this field to, locate the box for the value, then type
This is the value that Outlook stores for appointments with a status of Busy. Click OK to return to the form. Click Tools, Forms, Publish Form to publish the form to your Calendar folder, giving the form a display name of Busy All Day Event.
The next time you need to display an all-day event with a status of Busy, simply switch to your Calendar folder, then choose Actions, New All Day Event. A disadvantage of this method is that the custom form won't know what date you're looking at in the Outlook calendar, so you'll always have to set the Start and End dates manually.
Learn more from "Outlook: Scheduling All Day Events."