Dial by name directory hangs up when you press # at the prompt

I recently installed a system for a non-profit that really wanted to use the directory with dial by name functionality in Asterisk 1.6x.

The system is FreePBX 2.7, Asterisk with Dahdi 2.4.0 running on Ubuntu 10.4.2LTS. The phones are all Aastra 9143s.

The directory works as it should until you have 2 names that match on the 1st 3 letters. You are then prompted to press # but when you do the system hangs up the call.

Why would this happen?