*** UPDATE ***

I have added an additional account to Outlook, using a new email address from Outlook.com and imported contacts again into Outlook - and this time everything works fine.

It therefore appears to me that there is an issue with importing the contacts over the location they are being saved to - somewhat annoying given the options are the default 'Contacts' folder...

Anyhow this has been solved.

For other reading this - if you are setting up outlook try not to use it to link directly with gmail - its a world of pain.

Now I can return to my scheduled task of carrying out mail merges from Word.

Thanks for all your help.
GreenBoy