Outlook's 2010's Favorites pane looks unmovable -- you can hide the whole left-hand navigation pane with a single click, but not Favorites itself. If you'd rather keep that space purely for a standard list of folders, Tech Recipes reminds us how to get rid of it for good.
As with much of Office 2010, the option is there, but as it's on the View ribbon, not the standard Home tab, you might not notice it. Click on View, head to the Navigation pane, disable Favorites and you're good to go. (To customise what appears in Favorites, just drag and drop folders you'd like to see there.)