Testing in both 1.7 and trunk - it looks like the select query for smart group "members" is no longer showing explicitly added contacts (i.e. contacts who have a record in civicrm_group_contact - but are not part of the saved query results).
Please verify and fix in trunk.
To reproduce with sample data (generated.mysql):
- Advanced Search - Address -> State = California (currently returns 4 records)
- New Smart Group from this search
- Navigate to a contact NOT in the search results, and add them to this smart group via Groups tab
- Go to Manage Groups >> Members for this group. The 5th contact, added above, does NOT show in the group member listing.