I can set up a new audience without any issues, when I pick someone to the be
the owner, sharepoint finds that person and then I save the audience and
compile.

After I go back to the audience to view the properties, I can see that the owner
has a red squiggly and that sharepoint no longer has any idea who this person
is.

Because of this I can't add membership to my audiences. The UPS service is
working perfectly, so I am not really sure what is going on, can anyone point me
in the right direction for audience?