Hi Peter,
Yes the contacts appear in the phone contacts as expected. The problem is when I go to groups - NewGroup, the window for enterng detals first dropdown box is labeled account. This by default says All accounts. If I sellect the dropdown it only lists Phone. Gmail and and Yahoo, there is no sign of Touchdown.
I know the contacts app knows about touchdown because if I go back to contacts tab and go to contact settings - contacts to display, Touchdown is listed. I have tried selecting just this and the individual contatcs screen shows just touchdown contatcs, but when I go to groups they still don't appear as ones I can ad to a new group.