"A new entry could not be created. Please use the contacts module to create this entry." - is the error that comes up
when someone has a messed up (Outlook) contact list. 

When I encountered this problem, the problem came from having an extra (corrupt) contact list. 
So this fix has you remove the blank (bad) contact list; which then allows you to add contacts 
to the good (remaining) list.

1) Make sure the first contact list in the drop down menu is the one that’s bad (blank)
   A: Go into Outlook.
   B: Click on the little book icon on the task bar at the top of Outlook.
   C: On the right under Show Names from the: click the down arrow, then 
      the up arrow that appears when the drop down menu comes up
   D: Scroll up to the topmost, of the two, contacts list and click on the first one 
      that appears in the drop down list to make sure that the first one is the 
      one that’s messed up.
2) Remove the bad contact list shown in the previous step. 
   Do this by following the steps below. 
   The word click is implied with each step below.
3) Tools (in Outlook)
4) Options (at the bottom of the drop down menu)
5) Mail Setup (tab)
6) Email Accounts (button)
7) View or change existing directories or address books 
8) Next
9) Change (button)
10)Highlight the first contacts list show IF your first step (above) 
   showed that this was the one that was blank and non-functional.
11)Remove Address Book (button)
12)Close (button)
13)Finish (button)