Hi Warren,
It looks like you might be a little confused about Groups and Groupings. The first step to understand is: Students (and other participants) go into Groups; Groups go into Groupings.
The idea is that within a class, you might group the students by one scheme for one activity, and group them another way for a different activity. For example, in the Theological College where I work, we have a Grouping for Exegeticals, where students are allocated to tutorial groups randomly, and another Grouping for the essay, where the students are allocated by which question they chose for the essay. this is for the sake of marking - the group tutors mark the exegeticals for the group they will meet with in the tutorial session, and the essay marking is more consistent because all of the attempts at each question are grouped together. The Essay Grouping contains Groups for Question 1, Question 2... and so on. The Exegetical Grouping contains Groups for Group A, Group B, etc.
So you create the Groups, and put the students into them. Then you create a Grouping, and put the Groups into the Grouping.
If you only need one Grouping (i.e. the students are in the same Groups for everything), then the Grouping is unnecessary. You can just set the Assignment to "Separate Groups" and enter nothing in the Grouping setting.
Rob