This problem was reported when WLM was first released. I'll try to find the folder that you have to delete so that you re-download your contact list. I will update this post when I find it.
EDIT: I remember reading this somewhere on this forum but couldn't find it anywhere
at least google helped me eventually
quote:
Originally posted on forum.msgshit.com by Christiano
If your contact list is empty or incomplete after you upgrade to Windows Live Messenger, the cached contact list may not have updated correctly. To update your contact list, follow these steps:
a. Sign out of Messenger.
b. Click "Start," click "Run," type the following command, and then click "OK":
%USERPROFILE%\Local Settings\Application Data\Microsoft\Messenger\
c. A new Microsoft Windows Explorer window opens. In the window, click your Messenger ID.
d. Double-click the Contacts folder.
e. Delete the two folders that are in the Contacts folder.
f. Sign in to Messenger again.
note: b. can also be done by going through the likes of windows explorer
X:\Documents and Settings\%USERPROFILE%\Local Settings\Application Data\Microsoft\Messenger\
"X:\" is the drive which windows is on and "%USERPROFILE%" is your username for your computer.
I hope this fixes your problem
EDIT 2: please see my next post further down for what to do different to this in WLM