Your change to the list of local address books will not take effect until you restart Notes

What happened

You clicked File > Preferences (Notes Basic client users, File > Preferences > User Preferences; Macintosh OS X users, Notes > Preferences), expanded Mail and then clicked Sending and Receiving, and made a change in the Local address books field.

You can use this field to specify that HCL Notes® use a different file for your Contacts than the default NAMES.NSF in your data directory, or to add local contacts files (JohnSmithnames.nsf for example). When you add a contact file, the name of the file dispalys in the Directory field when you are selecting names or addresses from a dialog box.

What you can do

Exit Notes and restart.