Yes. We look into nested groups.
When indexing AD we get as much information as we can get via LDAP queries.
The main limitation can be caused by LDAP - if too many entries are retrieved there should be a severe error in the logs during indexing, also the results may depend on whether AD is set the "include aliases" flag.
If you have users from multiple domains within a nested group then its a good idea to point to a GC that knows about all domains. Also try and changing the port to 3268 or 3269 (secure) and see if this helps.