Hello. A bird fired off a request that I break down my experiences with privacy, so here's somewhere to start.
I may be editing this as I go, and I'll answer any questions about it as we go along.
The basics:
So, group privacy is both weird and buggy, but here's a definition of the basic terms as the site uses them.
The group privacy setting
Is a misnomer. It determines whether or not the group is privately listed or publicly listed. Essentially, whether it appears in the group list along with the rest. This is actually a useful function, but obviously the name is confusing as @#%$.
The member ranks
These primarily determine everything, and much of what we'll cover is how to make sure these are set up to protect the group's privacy.
The first thing to understand is that as far as the site is concerned, "member" means all members of the BioWare forum, NOT members of the group, specifically. This makes it a little easier to understand why everyone can see threads through portals and backdoors - it's because default membership applies to everyone on the site (even people without forum posting privileges.)
An Example of Settings/Membership Ranks
So, here is how one of the groups I know handled things, more or less (Ranks have been changed to save embarrassment from silly rank names.)
The Privacy Setting was originally private, and it wavered as we sorted things out, but eventually we set it to public. We were able to do so, being publicly listed, without our group's privacy being compromised.
From there, the way we broke down ranks was the tool for establishing privacy.
Default Rank requires that all privileges be unchecked. This is the most important privacy setting there is. This is what all members of the BioWare Forum have, so it's important to make sure that all privileges are unchecked for the default rank.
First Level Member Rank is what you would theoretically be approving with the moderator step. This is actually a two-step process, where the final step is to edit the member's rank from "default" to "Group Member." This rank had posting and viewing privileges, without which the default rank could only see the error message regarding the group being private.
Officer and Mod Ranks would have privileges like editing or hiding posts, approving members, stickying/unstickying threads etc. It can make sense to have more than one level of these, but with 70 some odd members it's probably not necessary to complicate things.
Administrative Rank(s) are actually quite important. These are the members who can edit member ranks and the Group CP. By default, the group leader has all administrative privileges checked. It is a good idea to have at least one other administrative rank, for emergencies (they do come up) when privacy gets buggy and you need someone to get into the Group CP and check the ranks for bugs or holes in security.
A quick note about administrative ranks, unless it has been fixed since then, a leader can't "give up" a group, although there is a function to pass on leadership. It merely clones the leadership rank, and leaves both members with leadership privileges (not that it ended up ever coming up in my experience.)
I have a bit more to cover, which I'll reserve a couple of posts for. This post will almost certainly be edited for clarity, as well, but ask anything you like (although give me 1 minute to reserve the posts, my computer is slow. 
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