Mutt: setting the maximal line length

Well, I could not find any Mutt color like configuration statements that allow to apply color information over multiple lines.

Perhaps the easiest way to deal with Outlook message is to setup a filter, e.g. something like:

$ awk '/-----Original Message-----/ { level++; }
       { for (i=0;i<level;++i) printf(">"); printf("%s%s", $0,"\n"); } '

mutt has even a display_filter command:

When set, specifies a command used to filter messages. When a message is viewed it is passed as standard input to $display_filter, and the filtered message is read from the standard output.

Probably you can make this command conditional (via hooks) - i.e. only execute it when the message has a outlook specific user agent header. Perhaps via the message-hook:

This command can be used to execute arbitrary configuration commands before viewing or formatting a message based upon information about the message. command is executed if the pattern matches the message to be displayed.

set "/home/user/path to files/"*.xls
for f do [ "$f" -nt "$two_day_old_file" ] && set "$@" "$f" ; shift ; done
touch "$two_day_old_file"
echo $MBODY | mutt -s "Data files for $TODAY" -a "$@" -- $EMAILS    

To mail them one at a time change the echo line to:

for mailf do echo "$MBODY" | 
    mutt -s "Data files for $TODAY" -a "$mailf" -- $EMAILS
done

Would probably work, but your real problem lies here:

...
set IFS=...
...

This doesn't affect the value of the internal field separator at all, but rather it assigns the value IFS=... to the first positional parameter, or $1. $IFS remains valued at whatever it was before you set $1. You just need to do:

IFS='
   ' 

Or...

IFS=${IFS# } 

...if $IFS is set to the default value, which it must be if this is an executable script and you have not altered $IFS anywhere else in the script.