Came across this problem recently during a migration from Exchange 2003 to Exchange 2010. When a user attempted to add a group to the permissions of their calendar they would find that the group had a deny icon next to them () and attempting to add the group would result in this error:
We had already ensured that this was a mail enabled security group and tried running the following command:
Set-Distributiongroup–identity <DistributionGroup> –MemberDepartRestriction Closed
This did not solve our problem. After a while we came across a message board thread for Exchange 2007 that involved an ADSIEdit which worked for us on an Exchange 2010 system:
1. Open ADSIEdit and browse to the group object
2. Open the group object and find the attribute msExchRecipientDisplayType
3. Open the attribute and clear the value
You should then notice that the deny icon has disappeared. Those who are operating in cached mode in Outlook may need to update and download the offline address book.