I am using Groups for the first time.

I entered about 30 items into 1 group, entered 2 items max to win. At first, it did help me those 2 auctions. However, after winning those 2 one of the sellers was a flaker and I had to add a 3rd auction to win. And so I changed the max number of items to win from 2, to 3.

After a few days, I noticed that I wasn't winning any more auctions and so I went to check the results of completed auctions that had been added to this group. What I observed :
- All active items, under the column 'My Bid' it showed 'No'.
- For each active item I had to re-open each item, and add to the group again in order to 're-activate' them. Following that, each item under the column 'My Bid' did display my required snipe amount
- For ended items, whether won or not, it also showed 'No' under the column 'My Bid'
- For ended items that I did not win, even though bid increment rules were satisfied, it did not place those bids for me. It also did not show under 'My Status' bar underneath each auction the reason why the particular auction was not won.

What should I do ? How should I handle a similar situation in future if I have to revise the max number of items needed to be won ?

Once your goal was met (you won 2 items) all other snipes will be cancelled automatically, that's why you see "No" in your "My Bid".

The Group counts active snipes only.
If you needed one more item and keep using the same Group, you should put "1" as your limit, not 3. If you put 3, that means you need 3 more.

So what should I do, if I already won 2 auctions, and need 1 more ?
I need to put '1' as the new limit, and back and re-activate everything again ??
Sounds lime a lot of trouble, no ?

Yes, you need to re-activate the ones you want to be included in your Group now.
No need to touch the ended snipes, of course.