We have 500 + public folders in exchange server 2003 servers and want to deny access for particular DL to all Public folders.

Rather than denying access, do the reverse and simply do not give that DL any rights to any folder. Of course, any members of that DL who have explicit rights defined, will still have permission. You can and add/remove permissions quickly with pfdavadmin or the built in Settings Wizard, assuming you are running at least SP2.