Re: New groups won't be shown in the Modules
As far as I know, there's nothing that needs to be turned on for new groups to show up in the Groups list on the Admin Modules page's "Assign new module" section. I just did a test with 1.9.7, making a new group called "Test" and it was in the list when I went to the Admin Modules page.
If there's no config setting that needs to be set for this, I guess your Tiki installation might be incomplete or something. Since you can assign perms for the new groups, they obviously exist in the database. Maybe you could try reuploading or copying to the Tiki directory the lib directory files (most of these aren't involved but I don't know offhand which ones are) and the tiki-admin_modules.php and templates/tiki-admin_modules.tpl files. Hopefully someone else might have some ideas on this.
-- Gary