Hi After upgrading civicrm to v4.7.10 from 4.7.8, it looks like the display of groups and sub-groups has changed and is not partially broken.
The first group and has sub-groups is displayed showing that there are sub-groups. The second group that has sub-groups and sub-sub-groups shows as a regular group but not that it has sub-groups.
This prevents from accessing the sub-sub-groups. They can only be in searching for them in the Find so it appears to be a display issue only.