Hi Robert,
I suggest to move the devices to your new group and then just force the new settings/policies to your existing devices from the group level, the behavior you see is expected to happen because we have not yet force any policies from the new group and devices will still carry on the old ones.
If you really want to erase all the existing policies from a single device, click on the device itself from the dashboard "devices menu", click on the device you want to modify, then select the "configure tab" and click on "Optimization Policies" , click on Override Group Settings , click on the first "check box" from the policies list and delete them all.
( this is not recommended because you have to go like this for every single feature that might be different from the previous group to the new one)
So please try to go with the configuration guide:
Forcing Device Group Settings on All Devices in the Group
http://www.cisco.com/en/US/docs/app_ntwk_services/waas/waas/v501/configuration/guide/groups.html#wp1041708
hope that helps!