Can you share the solution with the rest of us? I'm also having trouble on a newly installed Ubuntu 18.04 Server. Every time I mount the encrypted partition, it changes the ownership to root:root, no matter what I do. And I verified everything listed above, so I can't figure out what's the problem besides it's inability to handle fs-option paramaters that involve an equal character (=) in the argument.
The following attachment shows the settings page that work. By enabling the options "Can create new users?" and "Can delete users?" the user is suddenly able to switch their group. The options disabled causes any attempt to switch groups result in the error "Failed to add users to group : You are not allowed to delete users"
The webmin user module.
Forgot to mention this is running 1.881 on Centos 7 x86_64
Add To Group visible after restricting access