Yes, that is correct.
When I register a new user and try create a group, there's no restriction.
Havnt set up anything with paypal yet, just want to test 1st. Also Im testing on localhost - xampp
This is due to the "localhost" bug in s2Member. This has been corrected in v3.1.3+, to be released soon. Until then, please have a look at this thread. It's a quick fix that gets s2Member working under a "localhost" installation. [
viewtopic.php?f=4&t=381&p=1556&hilit=MAMP#p1551 ]
Another question: If some of my users ( higher than 'level 0' ) pay via bank deposit or cash, will I be able to manually set their level for the set period according to payment I've received other than paypal?
Yes, In either case, ( s2Member, or s2Member Pro ), you can always accept cash, check by mail, payment through a Virtual Terminal, etc. s2Member is fully compatible with this.
Once you have payment, log into your WP Dashboard, and go to: Users -> Add New, or find an existing User in your list of "Users". Click "Edit" next to their name in the list. You can assign them one of the s2Member Roles, and even go back and edit their specific account details if you need to.
There is also a place on the User Edit panel where you can manually update a PayPal Subscr. ID, or this can be a PayPal transaction ID, or a transaction ID from another gateway if you need that. Administrative notations are also possible, giving you the ability to add private notes that your staff can use to record other details.