where are groupings found in live mail
They are called categories. If you go to your contacts page, you will see Category on the top left. There you can create groups of contacts that are already contacts of yours.
Note: Categories operate just fine in the 2011 version. They loused categories up in the 2012 version. You can no longer get the 2011 version.
Also note: when you do backups or re-installs categories are not covered, so if you have to re-install, you will have to recreate you categories.