Assign user groups in workflow

Hi 

I am trying to use user groups in my workflow it however crashes.  The workflow works fine if I assign single users but is unable to find users if I want it to use user groups.  

In the assignment tab I select participant -> type of participant = usergroup participants and the relevant user group.  The error that it gives is :

Stopped (error): X++ Exception: Work item can not be assigned to any user. Please correct the setup of authorization and organization hierarchy.
 at SysWorkflow-save
SysWorkflowQueue-resume

Can anyone give me a tip on where to look.

Regards, Bjarki.