You didn't specify your Outlook version but I'll assume it's Outlook 2002 or
2003.  The association between the Contacts folder and the Outlook Address
Book is broken.  To fix it, go to Tools | E-mail accounts, select "View or
change existing directories or address books", and click Next.  If you don't
see the OAB in the Directories and Address Books list, click the Back
button, then select "Add a new directory or address book", then "Additional
Address Books", and add the OAB.  Then keep clicking Back until you get back
to the first dialog box, and go back to the Directories and Address Books
list as you did earlier.

Once the OAB appears in the list, select it and then click Change to make
sure the Contacts folder(s) you want to display are listed.  If any of them
aren't listed, you'll need to enable those Contacts folders as Outlook
Address Books by right clicking the folder, selecting Properties, clicking
the Outlook Address Book tab, and checking the "Show this folder as an
E-mail address book" box.  Make sure you restart Outlook after making these
changes.