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This security group is showing up in people picker but it doesn't in the Select Security Group or Distribution Group window when you are creating an audience in Central Administration. This group is in Active Directory with scope Global and is a Security group.

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The issue was that the AD group was located in an AD OU that was not selected in the ones that are being synchronized with SharePoint. The group was moved to an AD OU that is being included in the synchronization and it showed up to create the audience.

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