This question is all over SO, but no one seems to have had the same problem as I have.
When I do something like this
$(function(){
$('#unique-ul').sortable({items:'li'});
});
I'd expect it to "just work". By and large, it does. I can drag any <li> from any list to any other list, and any sublist of that <li> is dragged with it.
However, when dragging, it seems to get really confused about where it should be dropped. Here's an example using 1.8.0; it displays the same behaviour.
All the other responses I've found about this lead me to believe that this behaviour is supported by jQuery UI; for example, here is a bug registered against 1.7 about nested draggables: http://dev.jqueryui.com/ticket/4333
I can't find anyone else who has had this issue so it suggests I am Doing It Wrong. Any clues?