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Add Contact Group is Grayed out in Outlook 2011
This document explains how to fix when the Add Contact Group is grayed out
If the Add contact group is grayed out, the "Hide options on my computer" option is probably checked. To uncheck it:
1. Open the outlook dropdown menu and select Preferences.
2. Click on the General option.
3. Uncheck "Hide folders on my computer"
NOTE: This allows the user to create LOCAL contact groups. These groups are not the same as personal distribution lists in Exchange and are not backed up to the server or available in OWA or on other computers.