Organizing and accessing contact information in Outlook.com
I have exact the same problem, so I think Microsoft still hasn't fixed the problem.
I also encountered this after using Office 365. Before that there was only one contact group on my iPhone.
After using Office 365 and using my Microsoft account with Skype I received the extra contact groups on my iPhone.
This concerns the groups blocklist, MeContact, PersonMetadata and Skype-contacts.
And especially the PersonMetadata is annoying as it has a lot of "# No Name" in it.
Off course you can deselect this groups and only select the Contacts group, but I want those unnecessary groups deleted.