by Emma Richardson.
1. You should take Access All Groups away from students. This is not a permission that you want them to have and could have undesired consequences. (You will never be able to separate students in a course with it set that way and they might see activities/students/forum posts that you don't necessarily want them to see)
2. Because you have taken the Access All Groups away from the Tutors (which is normally correct), they will only have access to students that are in a group with them. So, for them to get a notification (you actually need to add this permission too), they have to be in a group with the student they are grading.