I came across the following error while trying to add a mail enabled group to a Public Folder:

1st I tried changing the group from distribution to security, but, I still got the same error.

Then I found this post. Turns out the GUI doesn’t completely change the object. You need to run the following command from the Exchange Management Shell (Exchange 2007 for me):

Set-Distributiongroup–identity

In my case it was:

Set-DistributionGroup -identity AmbCare

You can read the linked post for the command for Exchange 2010.

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