Dumb question:
1st palette shows Highlight
Subpalette doesnt:
Am I doing something wrong?
I think this could be because the first Palette you have shown is the Conflict Palette and the second Palette (the sub palette) you have shown is a Group Palette?
That’s it!
Do you know if there’s a way to highlight the first character in a Group Palette?
I don't think so.
But I suppose if the Macros the Conflict Palette is calling up were Macros to just do a key press, and if they were in Groups where all the Macros had the same Key Press then that might generate a kind of Sub Conflict Group Palette... but this is crazy convoluted and my head is hurting just thinking about it 
Interesting, I recently removed the Key presses from that group. Will add the same key to see if that makes the highlight appear again. Thanks.
Edit: no luck so far, will keep searching.