The contact list limit is in the MSN Servers, you won't find anything in the Registry.
NoRoom's List Cleaner is helpful for this issue. But you can simply go to the Privacy panel of MSN Messenger and delete some emails from any of those lists.
Try adding someone through
Web Messenger. If it still doesn't work, it's a problem with your account.
If it works (you can add someone through Web Messenger), uninstall MSN Messenger, clear your Temporary Internet Files folder (you can do this through IE), re-install MSN Messenger and try again.
If all this fails, try contacting MSN support.