Converting existing content to lists in Dreamweaver can be tricky. The easiest way to see this is to illustrate with an example. Our end goal is a list that looks like this:
Here's the problem: those breaks that move the names of the food items to the next lines are line breaks not new paragraphs. The content that comes after them (i.e, the fruit item names) are considered part of the "Fruit" list item. So you cannot indent the individual items without indenting the "Fruit" list item as well.
The solution is to delete the line breaks:
Watch as your instructor repeats this for the "Meat" and "Dairy" list items.
When working with nested lists, if things get messed up, usually the easiest thing is to get rid of the list and start over. To remove a list, highlight the whole thing and click the relevant list icon in the Properties Inspector.