So I have re-added custom message rebooted client and it has now resolved the issue.
######Update###### 02/09/2013 I have recently come across this issue again but the resolution was different.
When running Outlook with Lync (and Profile Unity is running) that you can no longer see the "status" of a person anymore (available/Presence Unknown/busy).
In my experience the Presence for some contacts shows as Unknown or Offline, however it can also cause some Contacts to go missing from the contact list, and to not display their Presence in Outlook.
The resolution is simple enough – delete the SIP profile directory and restart the client.
One user was having an issue with where the Out Of Office Flag would not disappear from the Lync Client even tho there was no OOO set within Outlook/OWA.
I looked all over the internet looking people that have had the similar issue and post the question online but to no avail.
A user can tell if the address book is completely downloaded when the “Address book synchronizing” status goes away when searching for a contact – as shown here: As been previously well documented, if you need to force the Lync client to download the address book immediately you can.