I am not seeing any changes in the watchlist after creating a group and subscribing to the group. There are also no entries in the swl database tables. This feature seems to be working on http://smw.referata.com. MediaWiki 1.18.3/SMW 1.7.1
Topic on Extension talk:Semantic Watchlist
I think the issue here is how SWL handles namespace/category/concept names. It seems to require an underscore. I notice that your watchlist category name is "Calendar items". What if you change it to "Calendar_items"? I had a similar issue and adding the underscore worked for me.
I have submitted bug report to Bugzilla.
Thanks, I'll try to have a look at this next time I poke at the extension :)