Sending to ex07 distribution groups - User known error

Could someone please give me an explanation or resolution why I get a 'user unknown' error when a I send to a mail enabled distribution group on an exchange 2007 server.
The distribution group works when sending from workstations within the domain but when sending from outside of the domain I get the user unknown error.

This is an native exchange 07 system that has been migrated from ex03.

All groups created on the old 03 exchange and migrated to ex07 work as expected (eg sending from both internally and externally of the domain) These are shown as 'Mail Non-Universal Group' in the Console whereas a group created in Ex07 shows as 'Mail-enabled Universal Distribution Group'