This one I think I do have a repro for. 
When you change the user default notifications for a group, it should give you a pop-up like this, which will let you choose whether you override existing preferences or not:
I’ve just had a quick run through on my test site, and I think I’m getting some unexpected results:
- Create group
- With admin as Owner
- Who can message this group? = group members, moderators and admins
- Default notification level = Watching
- Send group message so the inbox appears in the message menu
- Confirm correct notification level for user
(flip to desktop view if on mobile)
- Manage/Interactions
- Change
default notification levelto Normal (and save) - Would you like to apply this change historically? = Yes
- Confirm correct notification level for user after change applied (now ‘Normal’)
- Add a second user to the group.
Expectation: this new user will have the current group default notification of ‘Normal’. However they got the original group notification of ‘Watching’.
Does that marry up to what you’ve been seeing @jerry0?
If so, this sounds like a different issue to @mbauman’s, so may need to be split off into a new topic to track it better.