My guess is that GroupA on the server contains a nested group that matches GroupB in the user’s pNAB.
Group A
John Smith
Carl Jones
Marketing ← matches pNAB group “Marketing”?
Rob Royce
Local groups get expanded on the client, which would explain why the pNAB GroupB names are stuck in the middle of GroupA.
I think you can change the nested group name in GroupA to “group@domain” to prevent matches to local pNAB groups. Make sure you have correctly populated the domain field in your public NAB groups with your Domino domain.