Hello David as you can see in the pic (sorry poor quality) I type the "f" in and get that in the pic including Favourites and a list of contacts that begin or are associated with "f"
Now if I type into "To" with "s" or "t" or "m" etc etc just depends on what letter you start with depends as to what list will drop down. So "s" might yield Soapworks Ltd and "st" might yield Stephen Bloggs "v" = Vista forums "j" = any contact starting with a J - John or Jan or Joshua or Joinery Works etc etc all those beginning with the initial letter you type in. It also lists those addresses that are associated with the letter so "s" includes an address that may start support@......
If I want to see the entire contacts list I go to the bottom of the page - left hand side as in the pic and click Contacts and it pulls up the complete listings
I add contacts either from the email if I know it I safe and also manually.
This process is exactly the same for the 2011 and 2012 WLM.