Correct spelling, explanation: the word outstanding has a long history and in the 16th century it had the meaning of endure successfully. Before the Middle Ages outstanding looked as outstonding and was a noun, which meant prominence. In modern English outstanding functions only as an adjective with two different meanings.

Definition of outstanding:
1. adjective – something excellent,
She is an outstanding student and finished high school with distinction.
2. adjective – something not completed or paid yet,
You’ve paid most of your debt, but 10% of that is still outstanding.

Collocations with outstanding:
A few common collocations include: consider something outstanding, absolutely outstanding, and remain outstanding.
It’s a great loss to the world of cinema as he was considered to be one of the most outstanding actors of our generation.
The way she performed the song was absolutely outstanding and everybody said it was better than the original version.
If your debt remains outstanding, you will be forced to leave the apartment without any notice period.

Incorrect spelling, explanation: the spelling of outstanding is rather easy as the word simply joins the word out with standing. However, because of the pronunciation, some learners and native speakers of English think that there is no -t letter in the first syllable and they spell the word as oustanding. This is incorrect, though, and the only right version is outstanding.