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I am trying to create a mail merge letter in Nisus Pro for the first time. It looks as if the First Name, etc get set up in Contacts> Is that correct? How do I manage that?

You can use Contacts for your data if you want to, or if it's convenient, but you don't have to. You can use a data document with "comma separated" data if you prefer. For example, if you have the data in a table you can easily turn that into a "comma separated" document.

If you want to use the Contacts, you need to have all the data entered into the Apple "Contacts" app.

Instructions in the Nisus Help Manual for all of these options are pretty thorough (pages 363ff.)