Group membership issues: Revolving Nested Groups

Symptoms

Nested groups were not resolving. 

Diagnoses

'Resolve Nested Groups' setting not set in WorkSpace 

Resolution 

Set the 'Resolve Nested Groups' option in workspace and restarted the K2 service.

http://help.k2.com/onlinehelp/k2blackpearl/userguide/4.6.5/webframe.html#k2_um_settings.html