If I open a public folder ( a favorite so I have a local copy) I see the new
search bar at the top. The folder in quesiton is a contacts folder. When I
enter somehting in the search bar, it searches emails and not the folder or
contact folders.

There appears to be no way to tell WDS 3.0 beta to index public folders, so
I am not sure what I expected it to do, but not that.