Under Layout, you have different configurations which can be displayed.

I've saved my configuration as, "Boxing".
And have set "Boxing" to be displayed in all configurations: Solo, Party, 10-man, 25-man, and Battlegrounds.

With the two line custom layout, you're forcing your toons to appear in column one.
And nothing else.
Then you're putting toons from groups 1-8, into the remaining columns.
With someone in your party, but not listed on the first line, they should appear in column two.