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Im having the exact same problem as this user:
http://www.magentocommerce.com/boards/viewthread/284012/
Although no solution was posted.
When I try and create a new order , all works fine except I cannot choose a custom group. Checking anything else in the dropdown results in the loading dialog , and it then resetting to the default value.
No errors are thrown in the logs.
This , it seems is related to payment gateways. Specifically in this case , SagePay. Removing the SagePay plugin solved the issue.
In 1.3 we were using a different plugin than what works in 1.4.