Both of the .jpgs look like they are of the same window in CONTACTS and show that you have the same setup I do.
If you can:
Goto MAIL
Tap EMail message in the upper left corner
Tap "To..." to get the "Select contact(s) to whom to send an email." window.
THEN look to see how they are sorted.....and maybe take a picture of that???
Mine are sorted differently in the Contact (Last name) than they are in the "Select contact(s) to whom to send an email." window where they are sorted by First name.
Dear fredb58,
In XP I used Outlook Express, but when getting Windows 7 recently I started using Windows Live Mail (WLM), in All Programs, in the Start menu. It gave me the same problem as you describe and here is the fix that worked for me:
1) In the list of "Mail, Calender, Contacts, Feeds, Newsgroups (this list is at the bottom left of the WLM window for me, but might be elsewhere in your window depending on how you have your view configured), choose Contacts.
2) In my window there is now a list of all the contacts I have, and, for me at least, the surnames are the first column and this list was, and still is, sorted on these surnames. Click the Home tab at the top (in my window it is the only one but that might vary depending on settings). In the menu that appears, find the View section.
3) The View section should contain an item "Sort by". Click on that item, and you should see two options, "First name" and "Last name". I expect that in your case your "First name" option is selected. Of course, click on "Last name". Now, when you go back to Mail instead of Contacts, and start a new email message and click on the "To" button, the list of contacts that appears should have surnames in the first column and be sorted on that column.
Please let us know if that does not work for you.
It's disappointing that one has to go to the main contacts list to find the switch that sorts the "To" rendition of that list. That switch does not even affect the main contact list. There seems to be no apparent need for the swith in that place, and the place it ought to be is in the window that opens when you click on "To". If anyone (maybe from Microsoft?) could explain this apparent anomaly, I would appreciate it.