Before you can select a usergroup in the newsletter generator, you need to have that usergroup set up to show in the newsletter module.
To do this, you need to go to the user groups module (http://www.yourdomain.com/en/users/groups/search.asp) and edit the user group by clicking on the pencil icon.
Under where it says, “Show this Usergroup as an option to be associated with the following modules?”, you’ll need to check the boxes next to the modules that you want this user group to appear.
If you want to send newsletters out you’ll need to check the box next to Newsletters and Marketing Actions.
Once you do that, the usergroup will be an option in the dropdown selection in the newsletter generator.
Let us know if you have any other questions: firstname.lastname@example.org.