GillianFan, this is strange as all of the dialogs are telling the game to accept custom content, yet it is as though the game still is not allowing it. We know it is reading the files as it is displaying them at startup. The best things I can suggest now are:
Make sure the game is patched:
http://www.modthesims2.com/article.php?t=188931
Remove your current Sims2folder, install a sims2pack to generate a new Downloads folder. Install the CEP files again. Download a few new items and recolours, plus some genetics/ clothes and test them in game. You will again need to make sure the custom content is enabled in game, and then restart. Did that make any difference?

I don't have a patch. I didn't know I needed one I shall try that. I have made a new downloads folder several times. and there is some stuff showing up that I Dl but not all.

Please let us know if it helps!

Ok. it said my game was already up to date. and I still see the list.

Download the patches and install them manually from the official site:
http://thesims2.ea.com/update/?pid=Help_patches
The update check always shows the game as patched, as it is just checking the basegame version.

yea thats' what i did already.