I think I fixed my SMS issue. The problem I was having was that the name suggestions would pop up in the "To:" field whenever I was entering a new name. However, I already had name suggestions above the keyboard. So it was appearing in two places(!), thus screwing up my SMS. The following registry hack will disable the popup but still show the name suggestion above the keyboard.
Code:
; Fix SMS issue; prevent name suggestion popup
[HKEY_LOCAL_MACHINE\System\Inbox\RecipientAutocomplete]
"MaxSuggestions"=dword:00000000