Came across a problem the other day where i had a SharePoint Designer workflow which sent a notification out to a SharePoint Group but failed. The workflow was fine sending out notifications to individuals, it just wouldn’t send out to a group, it would report an error “The e-mail message cannot be sent. Make sure the outgoing e-mail settings for the server are configured correctly” which is a bit of a red herring as there is nothing wrong with the email settings.
After a bit of digging around, i found the following fixes which resolved the issue. It was actually to do with some of the permissions of the group I was using to send the email to, so you need to amend some of the settings on the group.
Firstly, Navigate to the site in question, click on Site Actions -> Site Settings -> People and Groups. Select the group that you are using to send the email to from the left navigation. Then click on Settings -> Group Settings.
Secondly, make sure that the group that you are using to send an email to has at least “Read” permissions on the Site where you created your SharePoint designer workflow.
Finally, within the Group settings section, make sure that “Everyone” can view the membership of the group.
hope that helps a few people out….