Error message

I think its the _ in front of the name.  

Try a small test - create a new Distribution Group with a Name as _Test
See, if Exchange 2007 allows you to create it or not.

Awaiting your response.

Hello Exchange geek, I did some research the problem is from the space not _ i think there is a user inside this group has a space. check this article i did the steps and it worked fine.

When you try to view the properties of a recipient with spaces in it's alias using the Exchange Management Console, you will receive the following error:
The properties on <recipient name> have invalid data. If you click OK, default values will be used instead and will be saved if you do not change them before hitting Apply or OK on the property page. If you click cancel, the object will be displayed read-only and corrupted values will be retained. The following values have invalid data: Alias.
In Exchange 2007 the following characters are considered valid:
Strings formed with characters from a to z (uppercase or lowercase), digits
from 0 to 9, !, #, $, %, &, ', *, +, -, /, =, ?, ^, _, `, {, |, } or ~.

In Exchange 2003 having spaces in aliases were acceptable, but in Exchange 2007 spaces are considered an illegal character. If you have a large organization removing all the spaces from aliases can be a daunting task. The following PowerShell commands will help you remove spaces from the following types of objects:
Mailbox
Get-Mailbox | Where {$_.Alias -like "* *"} | ForEach-Object {Set-Mailbox $_.Name -Alias:($_.Alias -Replace " ","")}
 
Distribution Groups
Get-distributiongroup | Where {$_.Alias -like "* *"} | ForEach-Object {Set-distributiongroup $_.Name -Alias:($_.Alias -Replace " ","")}

Contacts
Get-contact | Where {$_.Alias -like "* *"} | ForEach-Object {Set-contact $_.Name -Alias:($_.Alias -Replace " ","")}