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"Group" would be grayed out if you had a single object or a single compound path selected. Open the layer you're on on the Layers panel to investigate what you have selected.
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Your Layers panel is showing a selection that should allow grouping and Lock is also grayed. Maybe try clearing your InDesign Caches and if that doesn't work clear prefs
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Hi cherylm,
In addition to above suggested steps, please try to copy paste object on new file and check if the option is still grayed out or its working?
If that works move the complete artwork to new document.
Regards
Srishti