#1 - Aug. 28, 2012, 2:08 p.m.
Blizzard Post
With the release of patch 5.0.4 Players who utilize the Master Looter option in Raid groups may encounter a known issue under certain conditions in which loot cannot be assigned to players outside of the Master Looter’s own group.

We are currently working to resolve this issue in an upcoming fix.
To work around this issue, Master Looters will need to move players they wish to award loot to into their own group. Please note that normal loot trading between players in Raid groups will still apply once the loot has been awarded by the Master Looter.