Correct. They are different.

An address book - what you see when you press To button - is a virtual
container that displays all of the contacts that have email addresses. If
you use Exchange server or an LDAP directory, you'll have more than one
'contacts' list in the address book. Think of it as a shoe box holding a
collection of little black books and each address list in Outlook is a
little black book.

Contacts is a folder(s) within Outlook that holds all of your contacts -
including those without email addresses. You can have more than one contacts
folder (although we don't recommend it). Press Ctrl+3 to see your contacts
folder or Ctrl+6 to see the folder list and all contacts folders. If you
only have one contacts folder but several listed in the Show names from
field when you click To your profile is messed up.

First, go to Tools, Accounts and choose the option to change address books.
Look on the Outlook address book properties (Change button). If you have
more folders than contacts folders remove the contacts folders listed and
close the dialog - find the contacts folder in the folder list (ctrl+6) and
right click on it, choose properties and then the address book tab. Add a
check to enable it as an address book.

Next, Open the Address book (Tools menu) and then open it's Tools, options
dialog. If too many are listed, remove all of the Contacts lists from the
lower half and add them back.

If all else fails, make a new profile. :)
http://www.outlook-tips.net/beginner/new_profile.htm
http://www.outlook-tips.net/beginner/connect_pst.htm