The layout you are on defines your table context through the table occurance that the layout is based on. If you've deleted the underlying table than both the TO and the layout are oprhaned and not linked to any base table. That would make the target dropdown empty.
No fix for that, you need the contacts table... Once you have it back, make sure to repoint the TO that the layout is based on to the new contacts table.
Thanks! I went back to the beginning of the section and followed the steps exactly and this time there was no issue. But thank you for taking the time to give me an explaination of what happend sometimes you can learn more about whats going on from the mistakes you make than you do just from following the steps and doing things right.
I thought the relationships tab was purely relationships but now I know it shows the underlying table structure and if I delete tables there I can orphan my layouts.