When i make myself visible to selected people ja get most of the other people in two groups which makes the list long and unusable. I get two groups with basically the same people:
"Appearing offline to" and "Offline"
How to remove the "Appearing offline to" group.

Thanks

This group can not be removed, only closed by clicking on the arrow in front of the group. It is a default Windows Live Messenger group. To make the contact list more workable you can try to make your own groups and devide your contacts that way (Tools > Options > Contacts - Organize by: Categories). You can also chose to put offline contacts in separate Category or not.