There are two ways to convert a contact group to individual contacts: Create a list of the Contact Group members and import them into Contacts or use a macro to create the contacts.

Use this method to save the names and addresses of contact group (distribution list) members in a text file to use in other programs or to import into Outlook Contacts.

1. Open the Contact group (DL)
2. Go to the File, Save as menu. (In Outlook 2007, it's Office icon menu)
3. Choose to save as a *.txt file.

This saves the DL as a text file. You can edit it in Notepad or Excel and import it, or forward it to other users.

In this tutorial, I'm extracting the names from a DL so I can import them into Outlook as individual Contacts.

Create Contacts from Contact Groups using VBA

See How to use Outlook's VBA Editor

You need the GetCurrentItem function from Outlook VBA: work with open item or selected item. This allows you to run the macro either by selecting the Contact Group or from an open Contact Group.

' Based on a macro by Valk Beekman.
Sub CreateContactsfromDL()
Dim o_list As Object

Dim objContact As Outlook.ContactItem

' set your category here.
t_cat = "From DL"

' Current object and should be the distributionlist
Set o_list = GetCurrentItem()

For i = 1 To o_list.MemberCount
  
 ' Create separate contacts
Set objContact = Application.CreateItem(olContactItem)
With objContact
        .Email1Address = o_list.GetMember(i).Address
        .FullName = o_list.GetMember(i)
        .Categories = t_cat
        .Save
End With

Next

Set objContact = Nothing
Set o_list = Nothing
End Sub