check to see if the group exits in your local address book.  If the grop exists, an has not been properly updated, this can occur.

• Type in the group name in 'To' field in a new memo and expand group. You can expand it from action bar menu More > Expand Public Groups. Check the names in the group
• Type in the group name in 'To' field in a new memo, Right click and select 'Show name details'. Check the names in the group
• If you find the group names are not up-to-date in above cases, check timestamp in NEXTDPABSYNC ini setting in your notes.ini. By default, notes sync up recent contacts once a week. You may update the ini and check if it sync happened and if the group updated in your recent contact.

place the group in the BCC field of a new memo, hit F9 and if the group expands then it's pulling from a local address book.  If the group does not expand then right click the group name and choose "Show Name Details...", this will open up the source group document.  Take a look at the form that displays, does the form design look like it's coming from a personal address book or does the form design match the sever's address book design?  Take a look at the members that are displayed, does this give you a clue? Any nested groups?