In regard to your biggest complaint, I may have an answer, or something that can help. Outlook 2016, in default mode, has a 2-step expand for a conversation when it's collapsed, and it's meant to be a convenience but I can see how it might not be. If you're on a collapsed conversation and right arrow once to expand it, the first level expansion will only show messages in the conversation that originated from a sender or senders other than you. Your own responses are not included in level one expansion. If you hit right arrow twice, the conversation is fully expanded with your own responses (which are actually in the Sent folder) shown embedded in their correct place(s) in the conversation. In level two (full) expansion up and down arrows behave as you think they should.
You may also find that tweaking the Conversation Settings may get you the results you wish, but I'm not sure what combination would suit you best. That's for you to play with. To change conversation view:
A Show senders above the subject Default: ON
X Always expand selected conversation Default OFF Note well - it's a selected conversation, not one you happen to be arrowing up or down over
I Use classic indented view
Brian - Windows 10 Home, 64-Bit, Version 1809, Build 17763
A great deal of intelligence can be invested in ignorance when the need for illusion is deep.
~ Saul Bellow, To Jerusalem and Back