Why is the import from Outlook option not working?

Unfortunately the problem is likely due to specific settings within your setup of Outlook and/or your PC, and we are limited in the assistance we can provide with those types of issues.

An alternate approach would be to export your contacts from Outlook to Excel:
http://office.microsoft.com/en-us/outlook/HA010964221033.aspx 

Then once in Excel, you can delete all extraneous columns, and save the file. You can then import that Excel file into the system using the Microsoft Excel and CSV Files option.