Hi Jessica,
First check that your version of GTM can deal with data groups. If it can (After 11.1 I think) you might want to modify your iRule slightly.
when DNS_REQUEST { if {[class match [IP::addr[IP::client_addr] equals "Red_1"]]}{ cname www.redirect.domain.ipn.mx } }
IP::client_addr because that yields the address of the clients that you want to check. IP::local_addr gives you an address that is on the BigIP itslef.
If you think that the problem may be down to the data group query you could try
when DNS_REQUEST { if { [IP::addr [IP::client_addr] equals 192.168.1.0/24] } { cname www.redirect.domain.ipn.mx } }