Added filter to the node group items callback to remove recursive node groups right from the start. These tree pointers would be polled out internally as well, but this way they don't show up in the menus in the first place.

release/scripts/startup/nodeitems_builtins.py

@@ -61,9 +61,24 @@ def node_group_items(context):
     if not ntree:
         return
 
+    def contains_group(nodetree, group):
+        if nodetree == group:
+            return True
+        else:
+            for node in nodetree.nodes:
+                if node.bl_idname in node_tree_group_type.values() and node.node_tree is not None:
+                    if contains_group(node.node_tree, group):
+                        return True
+        return False
+
     for group in context.blend_data.node_groups:
-        if group.bl_idname == ntree.bl_idname:
-            yield NodeItem(node_tree_group_type[group.bl_idname], group.name, { "node_tree" : "bpy.data.node_groups['%s']" % group.name })
+        if group.bl_idname != ntree.bl_idname:
+            continue
+        # filter out recursive groups
+        if contains_group(ntree, group):
+            continue
+
+        yield NodeItem(node_tree_group_type[group.bl_idname], group.name, { "node_tree" : "bpy.data.node_groups['%s']" % group.name })
 
 
 # All standard node categories currently used in nodes.