Security groups can be used to assign security rights on resources inside your Windows 2003 Active Directory network. By using a security group, we can collect a group of user accounts in a department and assign them access to a shared folder. We cannot use distribution groups for this purpose and a security group has all the capabilities of a distribution group.
A distribution group can be used for sending emails to a group of users. We cannot use distribution group for assigning security permissions. A user’s membership in many security groups could result in slow logon performance. Therefore distribution groups should be used wherever possible.