Please make sure the SharePoint Group alert is assigned an owner and that the own has access to the list or list of targeted by the alert? If the alert is displayed as Unassigned then the alert will not be sent out. In the latest version of Alert Manager SharePoint Group alerts will be assigned to the user who created the alert. In addition, can you create a simple alert with the out-of-the-box alert page. This will ensure your alert timer job is running and your alerts are being sent out correctly.
If this doesn't work can you please upgrade to the latest Alert Manager 2007 version, delete the alert and recreate the alert. If this doesn't correct your issue we will have a technician look at the issue.
Download the latest bits here...
http://software.sharepointsolutions.com/downloads/Pages/default.aspx
You will find upgrade instructions here...
http://software.sharepointsolutions.com/support/knowledge/AlertManager/Pages/am0020.aspx