Cannot Send Item from Shared Contacts Folder

Outlook 2007 - Exchange 2003
====================
Hello,

In Outlook 2007 I shared a sub-Contacts folder with another worker (also on
Outlook 2007) on our network by right-clicking on the folder and selecting
Sharing and giving them the ability to add, edit and delete items.

When they receive the email they click on the Open choice and are able to
see the contents of my subContents folder.

However, if they right click on one of the Contracts in the share folder and
select Create...New Message to Contact and then send try to send the email
message they receive a "Cannot Send Item" message box and are unable to send
the email.

I have tried to change the permission levels on my shared contacts folder
but he continues to receive the same message.

What do we need to do different so he can send an email using a contact or
distribution list from my shared folder?

Thanks for any insight you can provide.