When you have more than one Contacts folder or address list enabled as an address book Outlook will use the folder when it resolves names provided it's on the check names list.

When you type a name in the To, CC or BCC fields, Outlook begins searching in the address list at the top of this list and works its way down the folders on the list, until it finds a match. For example: if you type Bill in the To field and have Bill Smith in the first contacts folder and Bill Jones is in the second folder on the list, typing just Bill will resolve to Bill Smith. You'll need to type Bill J to resolve to Bill Jones, or reorder the list.

If names in the address book are not resolving, open the address book (Ctrl+Shft+B) and look on its Tools, Options menu. If the contacts folder is not listed in the 'When sending mail, check names using these addresses in the following order:' dialog, you'll need to click Add to add it to the list.