Hi Ursula
To display the groups drop-down menu in the Grader report you need to set the group mode for the whole course (via Administration - Settings).
When you set this to either visible or separate it provides the group selection to the gradebook
as well as the Participants page. Of course choosing visible or separate won't matter for the gradebook as the student's only see their own page but it will matter for the participants page (choosing visible allows students in one group to see the members of another group but choosing separate only allows students to see those in their own group).
I wouldn't suggest forcing the group mode on the settings screen - if you do all
activities you create in the course after this point will have that group mode set.
I hope this helps
Teresa