Outlook Problems - 2 Issues

My client is having 2 issues that I just cant seem to fix:

"A new entry could not be added. Please use the CONTACTS module to create THIS entry."

That is the first one. They cannot create a new distribution list. I made sure there contact manager is set to Outlook.

Second Issue

The out of office reply seems to work internally. But when a outside email comes through it does not seem to be working. I checked our spam filter. This is a an exchange enviroment also.