your groups up to member probably have some vital permissions removed (in an attempt to give them 'no permissions'). Make sure that these groups have i_group_needed_member_add_power. The value to that permission depends on who should be first to give that group out to others. You'll probably want to have it set to 60 so only your admins and above can give it out (or anyone with i_group_member_add_power of 60 and above really).
In general to be able to hand out groups your own i_group_member_add_power must be equal to or higher than the needed_member_add_power of the group you want to give out. If a permission is removed then for comparison it's treated as a value of 0. So since the lower groups (hopefully) have no group_member_add_power assigned it'll translate to "if 0 >= 0" which in fact is true, so they're allowed to assign the group.
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