I created a subgroup but it doesn't appear in the list

If a user is a member of a group, it cannot be a member of a subgroup of this group, therefore the subgroup doesn't appear in the list of available groups. If you need to move a user "down" in the tree, first move it to a top level group (such as Registered) then back to the target group.
Also don't forget a given supervisor (a user who has the clearance to manage other users) can only deal with groups he belongs to (and subgroups of these).