In JabRef 9.10 (under Debian Wheezy and Java 6 SDK), group names associated with a selected bib entry are no longer underlined. The only way now to see what groups a particular bib entry is associated with is to look at its Add to Group utility in which groups already associated are somewhat highlighted.
Are you sure the "highlight groups" icon is set?
Using the latest version 2.10, groups are still underlined on my computer.
However there is one related bug: it does not work immediately for freshly assigned items (ie when dragging a reference to a group - it only shows up after first selecting another item, and then selecting it again).
Both issues are fixed in current master.
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