Your contact distribution list is most likely corrupted. You have to delete the offending distribution list and recreate the list.
When you recreate the distribution list, use a different distribution list name. If you use the same name for the new distribution list, the automatic name-checking feature will find the old distribution list details from its internal cache. This list in fact points to nothing, so if you accept the entry and then try to send your message, you'll get that unexpected error.
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