Well, I got my contacts working.
This is in my opinon a MS design issue with Outlook 2003. This really chokes me, after so many hours.
I have my Outlook set up so when I open the address book it shows all contacts and not the adress book. (address book has always been empty and never used) Well If your contact does Not have an email adress it will not show at all. Those contacts can only be found and only show under personal folders - contacts.
Contacts without an email address will not display if you click Address Book and it will only show contacts with an email adress.
So all along my contacts were synced. ARGHHHHHHHHHHHHHHHH