There is some major differences between WSS and SPS concerning the user selection to provide rights.
When you add people in SPS, you select users from AD. You see the users and the groups from the interface. I shoud say, AD Users and Security group.
I once had an argument with a client’s network admin about AD Groups. If you create an Exchange group (Distribution List) you cannot properly use this is SPS.
Worse, if you upgraded from an old NT4 PDC to Active Directory, you may cross some weird behaviors. To get rid of this, be sure that you use only AD security groups. And don’t try to mix Exchange Distribution List with SPS security settings.
When I wrote those lines, I had some problem to express what happened.
In WSS though you can use Exchange Distribution List (Remember… Not in SPS). User selection in WSS is not from AD. It is only by e-mail address. That means, if you select an Exchange Distribution List, it will paste all the e-mail addresses contained in the DList to the WSS interface. So, it wont really use the distribution list has a group, but only a path to retrieve the list of e-mail address.
Also, remember that is won’t be dynamic. So If you modify the DList, WSS won’t be sync. with the DList. There is no link between.