I had same problem with "update now" not working with imported Distribution
List when I upgraded to Outlook 2007.
However, if I create a new DL, the "update now" does work even on imported
contacts, which will solve the problem going forward. (Until the next upgrade
at least)
I find DL invaluable to send newsletter.

Signature
Tim
Russ Valentine [MVP-Outlook] - 05 Feb 2008 21:46 GMT
Documented here countless times. Update Now only works on DL's created
within the folder in which you are attempting the update, if then. No one I
know relies on or even uses that feature because it is so unreliable.

Signature
Russ Valentine
[MVP-Outlook]
>I had same problem with "update now" not working with imported Distribution
> List when I upgraded to Outlook 2007.
[quoted text clipped - 5 lines]
>
> I find DL invaluable to send newsletter.