...
Bearing in mind that I can't be bothered to read your entire email
(sorry!) the HTML_TreeMenu code in PEAR will make building trees for
display much easier, and combined with my array based tree class, it
will suddenly become as easy as an experienced hooker. (I'm told....)
[1] http://pear.php.net/package/HTML_TreeMenu
[2] http://www.phpguru.org/downloads/Tree_array/Tree.phps
How are your groups linked with your users? Does every user has a GroupId in his record?
Does this question has to do with building an html tree or it is about the best database schema that helps to construct and retrieve a tree faster?
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Thodoris