When I try to set group's inheritence it doesn't register that it has been set.
Yes, the group names are correct
Yes, I tried reloading
Yes, I tried re-instaling PEX
Yes, I tried reading the wiki
Yes, I tried asking other people that use the plugin
No, It doesn't work at all what so ever under any circumstance

Is the server running in online mode? (The server.properties file must have online-mode=true.)

Show us your permissions.yml file.

I discovered the issue, the permissions file bukkit adds had stuff in it for some reason. I just removed that file and it fixed it.

That's the first time I ever heard that.

I'm glad you got it working. ;)