Steps to reproduce the issue:
Create a fresh Orion profile.
Enable vertical tabs.
In one tab, go to https://news.ycombinator.com, and in another, go to https://lobste.rs.
Open a start page tab and place it between them.
In both the HN and Lobsters tabs, open a few child tabs by ⌘+clicking submission links.
Your setup should now look like this, with the start page tab active:

Now disable tab nesting in the settings.
Expand the top tab group.

Then expand the bottom group.
New tabs can no longer be opened, and the vertical tab list is in a broken state.
Relaunch Orion to restore functionality.
Video of the issue:
Expected behavior:
If tab nesting is disabled, the existing nested tabs should all become top level tabs and the tab listing should remain functional.
Orion and macOS versions:
Version 1.0.6 (145.1-rc), WebKit 625.1.8
Tahoe (26)