How do I ungroup layers?

I never realized there was a group layers in CH! You are right, I can see no way to ungroup after grouping. You cannot drag the contents out a level, “reset layers” (right click menu) seems to do nothing, etc. You can submit feature requests (there is an area at the top of the forums).

Here is something you could try (with undo at the ready!). I took a puppet backed by a PSD file. I grouped the two eyes to create a new group. I then edited the PSD file and made a little change (I renamed some other layer elsewhere in the puppet that did not matter) and saved the file changes. When I came back to CH, it reimported the puppet. The left and right eye was still under the group, but there were ALSO added back in their old position (there were two copies!). I then deleted the group (it was strange having the eyes in the group and outside the group at the same time). I have not tested extensively, but seems to still work and tagging etc seems to have been preserved. Might be worth a try!