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Currently SP has the facility to do two level grouping. However, I have a request to do three or more than three levels of grouping at some times.
Is there a built-in configuration or hack to do this?
This can be done, but requires SharePoint Designer. There are some excellent blog posts by Mike Smith about it (for 2007 and for 2010).
The steps are too long to detail here, but suffice to say it is possible.
Required, but never shown