AAAAARGH! Still stuck:
I created the list of recipients in Address book, confirmed all email addresses were in bold in the "distribution" list,created a new email, typed the first letters of the group, got the full name, but when I type RETURN or TAB, the name clears and the address field is blank.
I had created a group of names previously in Snow Leopard (I'm now on Lion), and if I type the first letters of the group and RETURN, it works.
If I type only two letters, i get a pop-down list of possibles. When I mouse over other groups I see the mouse pointer. When I mouse over the new group, it turns to the "type insertion" vertical bar. So it's different somehow. If I use the down arrow key to step to the new group and press return, the address filed becomes blank.
Wassup?