You can't create a group under a parent folder. So the parent needs to be converted to a group first in order to be able to a group under it. By default for new projects created with Xcode 16 Beta 3 or higher the top level is a folder (blue). The folder has a blue icon. The group has a yellow icon. In your case aaa is a blue icon, meaning it is a folder, convert that to a group first and then you will be add groups under it.