You can delete your contacts in order to restore previous functionality. Your contacts should then be downloaded and appear next time you sign in. Take the following steps in order to delete your contacts on the machine you are using.
For Windows XP – Click on My Computer, either in the Start menu or on your desktop. In toolbar at the top, go to Tools and choose Folder Options. Click on the View tab and scroll down to find the Hidden files and Folders icon. Underneath, click on Show hidden files and folders (if it is not already chosen) and click OK.
Now locate the Contact store folder. Go to your main drive (usually C). Go to Documents and Settings and then your user name (for example, Documents and Settings/John). Click on the Contacts folder and then the Me folder. Delete everything here.
Go back to your user folder (Documents and Settings/John) and find the following path: Local Settings\Application Data\Microsoft\Windows Live Contacts. Delete everything in this folder. You should be able to see any previously hidden folders as well which you will need to delete.
For Windows Vista – Take similar steps to show hidden system folders. Go to Start then Computer. Click on Organize drop-down list and then select Folder options. Click on the View tab and go through the same process as above (Show hidden files and folders).
Now go to your main drive, find the path C:\Users\Windows_log-on_name\Contacts, and delete everything. Similarly, go to C:\Users\Your user name\Local Settings\Application Data\Microsoft\Windows Live Contacts and delete everything.
The above should usually solve the problem. If it does not, contact technical support. You need to re-install Live messenger.