Surely you just go to People, make sure you're on All, and click Add Contact at the top. Don't know why you're deselecting groups etc

 

You need to create the contact in All first and after that you should be able to add them as a member to your friends group.

 

can you make\see the contact in all?

Just tested and worked ok for me, heres what I did

People --> All --> Add contact --> Enter name at top (fred) , contact type google, enter random mobile --> save.

Go into friends group --> add contact to group --> type "fred" into search --> select fred --> save(1)

et voila