When an element has finished being dragged by sortable, the visibility is switched to 'visible', overriding any visibility of its parents. This means, for example, that the element will still be visible if its parent is being dragged by an enclosing sortable. Ideally it should be returned to what it was, but at least it should be reset to inherited.

Fix: In ui.sortable.js, the line

$(this.currentItem).css('visibility', 'visible');

should be

$(this.currentItem).css('visibility', '');

(The value 'inherit' may be needed, but '' worked in all browsers I've tried as inherit is the initial value)