Windows 7 - Outlook Contacts Issues

I have 2 Outlook 2010 contacts issues I'm dealing with...hopefully you can help.

1. Unable to search contacts.
When using the "Find a Contact" search box in the 'Find' section in the ribbon, I'm not able to get any results. I have my contacts organized into contacts, vendors, architects, franchisees, etc. Within my contacts section, I have a distribution group for each job location, but no actual contacts. The only results it will return is a distribution list...no individual contacts are returned.

2. Unable to select contacts and organize distribution groups
When I open a distribution list and try to add a new contact, I'm only able to select our corporate address list (internal), my contacts folder (containing only distribution lists), and the stupid 'suggested contacts' list containing emails of people that i don't have organized because I don't need to keep their address)...no other lists are available.

Any thoughts on how I can get through these problems? I'm using Windows 7 Pro, 64 bit, Office 2010 btw. I did allow it to setup indexing. ANY help would be appreciated...this is driving me nuts!!!!

Thanks in advance
Bill