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Adding an Existing Domain to a Client

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I have a client that has their own domain already with 1and1.com  i have seen a few of your past responses on this and it does not make sense to me.  Not completely.  At 1and1.com the domain nameservers have been changed to my custom nameservers so how do you make it work in WHMCS?  WHMCS just gives an error that it is taken already.  After that if you go into the Client's profile domains tab it says Registrar Error Domain name not found    

What am i supposed to do next?  You can only use registrars that WHMCS has listed?

Should i be forwarding the domain or is changing the namesevers to mine  enough?    Biggest question is what to do in WHMCS to make it work.  Do not want to literally transfer the domain if I do not have to.  To make myself clear your directions to create an order with no product and choosing "Registration"...    There is no "Register" option.  Only Domain Registration which then opens to more when you choose Registration or Transfer.   ?????? 

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