Resolution: Cannot Reproduce
Affects Version/s: 1.6
Fix Version/s: None
Component/s: Core CiviCRM
Reproduced on Demo site, and on r8284 (my local version).
1. Do a search for all contacts.
2. Select a few
3. Select New SmartGroup and Save it
4. Go to Manage Groups and click on members
You'll see all the users that were in your search. It is always saving the criteria, not the selected members. In addition, if you try to remove members from the group by selecting them, this also appears to work, but does nothing.