It should work for the vertical sub-menu. I think I also tried the option you selected, but I'm not sure. In either case I would like to see all pages under a 'root' page, including the root page itself. If there are no child items, then you should only see the root page.
If you are selecting a child item, you still have to see all menu items and not only the items of the selected menu.
See this site as an example: http://test.adamdekker.nl/about
The about page is a group page, which has this structure:
About (group page)
-- Over Adam