Making a distribution / group list in outlook 2013

Are we doing something wrong?  Been using outlook 2013 against a POP server for months now.  Question came up of making a group from some of the contacts (when you click on people at the bottom, you get loads of names / details that we entered / came over from office 2007 when they upgraded).

You click on make a new list and the list of names to add to the list is blank.  There's a pull down at the top right of the window to choose what address list to look in.  That is blank.

is there something about the 'people' tab vs, contacts vs. address lists that I am missing?
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David Johnson, CD, MVPOwnerCommented:
people / new contact group / add a name / add members  / select from address book or contacts or new email.. do you have any contacts in your outlook contacts folder?
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