No error message is displayed. The Distribution Lists are absent from the list of possible targets.
The Distribution List in question is not targeted by Cloudlink in case of On-Premises Exchange environment or an LDAP query is being used to target it. Alternatively, archive-enabled mailboxes were not provisioned remotely using either of the available synchronization tools ( Cloudlink & Office 365 ). For example, the mailboxes may have been provisioned manually in the Management Console.
Create a new task and target the Distribution Group directly using the Task Manager Wizard in Cloudlink, and perform the Synchronize with Active Directory operation .

Once this task runs successfully, the desired Distribution List will be available to select as a Target for Retention Policy assignment.

A Clean\Full Sync also called as the Run Now sync will synchronize all the Distribution Lists from the O365 tenant into the Arctera Unified Platform instance.
In the Arctera Management Console, the desired Distribution List(s) are absent from the list of available choices to target for a Retention Policy.