How long has the distribution group been created?
I can reproduce this issue in my environment. I have also tested in other actions in Flow and the group cannot be found anywhere.
I suppose there is a delay before the new created distribution group/list is granted full function in this tenant. I would suggest waiting for a while (about 24 hours) and see if the distribution group/list is available in Flow. Then we will possibly be able to confirm if this is the default behavior or just delay.