I've had this happen numerous times in Outlook 2007. Staff member has set up a new contact folder and added contacts to them. Then they set up a personal group inside that folder. Everything worked fine....until they opened the personal group and decided to delete a member out of it. Instead of clicking on Remove Member they click Delete. That deletes the personal group. Question is where does this deleted personal group go? I thought everything went to Deleted Item .... it isn't in there to restore it. When I do this test on mine using the same version of software it works and I can find the deleted group and move it back over.

It is possible that it does go in the deleted items section, until the deleted items section is emptied.

As far as I know, Outlook 2007 is no different than Outlook 2003 or older. Absolutely everything is stored in one personal folder file and if that file ever gets lost or corrupted everything is gone. What this means is that if you want to recover this "personal group" from some file on the hard drive somewhere, its likely not possible. Its all in the same file.