I can’t reproduce this anymore. A sub-group now can be used as a key when in isolation mode, even if I select all the content of the group.

Just updated to CC 23.0.1 (Mac High Sierra), and still have this problem. When I try to align (using "align to selection") a set of identically sized, grouped objects they are completely misaligned, crashing randomly on top of each other.
When I isolate and select only one shape in each group and then align those, they align perfectly. So it's something to do with the grouping (in this case a shape, text and an svg icon).

Just checking to see if any progress has been made on this and it seems it affects MacOS as well:

https://illustrator.uservoice.com/forums/601447-illustrator-bugs/suggestions/32807218-can-not-make-a-key-object-selection-within-grouped

Same bug is in Windows version, so frustrating!

https://illustrator.uservoice.com/forums/601447-illustrator-bugs/suggestions/32518894-in-a-group-isolation-mode-cannot-set-a-sub-gro

Same here.

Example: Draw a circle, take the text tool, type a number, align both centrally and to the bottom of each other, now group together. Take the text tool and write some text to go next to the circle. Group this to the 1st group, now isolate the group, select all and (try to) choose the first group as the key object.

Normal behaviour should outline the 1st group to indicate it is the Key Object but the selection cannot be made. Incidentally, while in the isolation mode you can select the secondary text as your Key Object.

An interim workaround is to make the selection using the direct select tool (white arrow) and switch to the selection tool (black arrow) in order to choose the Key Object and then align - this won't work if you are using the centre of the group as the basis of your alignment.

Mac: High Sierra
Illustrator CC 2018

When I go into Isolation mode for a group of objects I am not able to select a key object to align to.
- Enter Isolation mode
- Select all objects with the group
- Try selecting one object as key object (while all object are still selected)
- Nothing happens...
If I have 4 objects in a group and enter Isolation mode and only select 3 of them, then I can then select a key object out of the 3 that are selected. The problem seems to occur when all objects are selected. Problem seems to be a bug within Isolation mode only.

I checked on Mac OS X El Capitan: same thing.

I confirm the issue.

It works if not all sub-Groups are selected. But not all.