How does Check Names in the Target Audience picker work?

Can anyone tell me how the Check Names button in the Target Audience picker works? We are having problem with a specific audience in one of our web applications. I don’t think the problem is the actual audience though:

The Target Audience is a global target audience named ”XYZ”. It is compiled and contains member. When an article is tagged with this audience all works fine as long as we use the Audience Picker dialog. But, when using the Check Name button the audience is not saved. This happens when I edit properties on the article (not customized UI) and also when I edit the article in a customized UI. No ULS messages.

I have read that the Target Audience Picker searches for matches in AD Distribution groups, SharePoint groups and Global Audiences. When we write “XYZ” in the audience field and presses the Check Names button one suggestion is displayed, named “XYZ”. When I write “XYZ N” and press the Check Names button several suggestions are displayed: 4 “XYZ” and a couple of other suggestions “XYZ xx…” etc. We have no SharePoint groups starting with “XYZ”, we have no AD Distribution Groups starting with “XYZ”, and we have only one Global Audience starting with “XYZ”. Where are all the “XYZ” suggestions coming from? Can anyone help, please?

We are using SharePoint 2010.

Best regards Heidi Lillebuen