My suggestion would be to use the sortable plugin that I created here: https://github.com/rniemeyer/knockout-sortable
It supports nested sortables. With the simplest configuration, it would look like:
<ul data-bind="sortable: children">
<li>
<div data-bind="text: name"></div>
<ul data-bind="sortable: subs">
<li data-bind="text: name"></li>
</ul>
</li>
</ul>
Here is a sample: http://jsfiddle.net/rniemeyer/EMu95/
If you are still having a specific issue with your nested structures, then maybe you can fork the fiddle to demonstrate your issue.