Ultimately my problem was probably site specific. The users I were trying to add were from a second domain. This domain does have a trust to my primary domain and as such I should have been able to add groups directly to my sharepoint instance. Unfortunately I couldn't.
My work around was simply to create a SharePoint group and add the users (from the second domain I must add) directly. This works fine.
I actually don't know the reason why the AD groups didn't work but the individual users did...if anyone has any insight let me know.
Thanks