Thanks for your reply Diane.
It's been at least a couple of days, however i have managed to figure it out.
You need to tick the option to 'Show this folder as an e-mail address book' in the folder properties as shown in the image.
I have moved a client onto hosted exchange so that they can better manage the contacts within the business.
They have a lot of people moving inbetween locations and having the contacts split into folders will help with out of sync data issues.
I have set up the contact folders and...