It appears alfred doesn't check the directories (I have an exchange account setup for work and it adds "Exchange Global Address List" to the Directories section of the Contacts app and from there I can search for people) if it can't find a matching contact.
This would be very useful as then I could e-mail anyone in the company just by knowing their name and not have to pollute my address book with their contacts.
Nothing I had done with toggling the setting in PathFinder and restarting worked (I literally spent over 2 hours trying different combinations of toggling the setting, restarting apps, and restarting my computer).
But based on your statement about modifying the setting file, I looked into it and I found something which does work:
Quit Alfred 2
Open ~/Library/Preferences/com.runningwithcrayons.Alfred-2.plist (this file is a binary property list, so you'll need a plist viewer - I'm using Xcode)
Under Root (where everything is), add a key called NSFileViewer of type String with the value com.cocoatech.PathFinder
Repeat the process for ~/Library/Preferences/com.runningwithcrayons.Alfred-Preferences.plist - just to be sure
Restart Alfred 2 and everything will be working as you expect.