If you upgrade from 1.7 to 1.8 this code seems to delete all grouping relatet tables: (lib/db/upgrade.php)
if ($result && $oldversion < 2007021504) {
if (empty($CFG->enablegroupings) and !empty($CFG->group_version))

{ // delete all groupings - they do not work yet :-( // while keeping all existing groups require_once("$CFG->dirroot/group/db/upgrade.php"); undo_groupings(); }

}
But these tables do exist in a fresh 1.8 installation, don't they?

Ok now we upgrade from this 1.8 to 1.9, there is a code segment in lib/db/upgrade.php:
if (table_exists(new XMLDBTable('groups_groupings')))

{ /// IF 'groups_groupings' table exists, this is for 1.8.* only. $result = $result && upgrade_18_groups(); }

else

{ /// ELSE, 1.7.*/1.6.*/1.5.* - create 'groupings' and 'groupings_groups' + rename password to enrolmentkey $result = $result && upgrade_17_groups(); }

which causes to treat the group update as one from 1.7 because the grouping tables where deleted in the update before. In result of that, the mdl_groups field "courseid", which was dropped for some strange reason during the update from 1.7 to 1.8 is not crated. Besides, the field password has already been changed to enrolmentkey, which now causes an error. (MDL-15580)

This brakes group functionality.