Contacted Boone directly and with his help we resolved this issue.
The trigger happens with your wp-cron.php file. For testing, I disabled this from kicking off on its own by editing wp-config.php to include:
Then we could reliable kick of the script manually via http://mysite/wp-cron.php
To test the email digest reliably, set the "Group Email Options" time to send digests a few minutes in the future. (**Heads up, it seems this plugin doesn't correctly calculate local time, so accommodate the UTC time offset when setting the time to send the digest mail).
When the time to send the digest rolls around, open your digest queue in one window, kickoff WP-Cron in another, and wait a few minutes. After a few minutes you should be able to refresh your email digest queue to see emails removed from the digest list, and if there is an error on WP-Cron or the mail function you will see this in the other window. (the one running running wp-cron.php).
"could not instantiate mail function. could not instantiate mail function"
After some digging we found out that the BuddyPress group email plugin could not use the WP SMTP plugin we've been using for email. I don't know if the fault is on WP, BP, the WP SMTP plugin, or the BP email plugin, but the resolution for us was to configure the PHP mail() function. This wasn't an ideal solution, but it does do the job.
Also, we left the wp-cron out of wp-config.php and we are now triggering this through a local schedule.
Hope this helps.