Seems like further clarification of the needs is required. Should "chained" intersections be allowed/considered as one group? Or discarded.

I also note that the cursor version for your data returns:

ShapeID GroupID

------- -------

A1B20 1

D1B19 1

E3A22 2

C5B23 3

A1B11 3

D1B25 4

Since D1B19 and E3A22 intersect, it would seem apparent that a modification to the code would be required to make the output actually put BOTH of those in the same group, i.e.

ShapeID GroupID

------- -------

A1B20 1

D1B19 1

D1B19 2

E3A22 2

C5B23 3

A1B11 3

D1B25 4

Again, some logic requirements are needed for muti-grouping (such as happens for D1B19 here).

OP, what is the actual and complete desired effect of this new set of inputs??