See: http://drupal.org/node/650008

diff -Nurp ../conditional_fields.orig/conditional_fields.module ./conditional_fields.module
--- ../conditional_fields.orig/conditional_fields.module	2010-07-16 10:24:42.000000000 -0500
+++ ./conditional_fields.module	2010-07-16 10:24:52.000000000 -0500
@@ -613,6 +613,29 @@ function conditional_fields_allowed_valu
 }
 
 /**
+ * Return an array of all fieldsets within the $form stored at the first depth of the array
+ * Each key in this array is a reference to the appropriate $form key
+ * Therefore all changes to $fieldsets will propogate to the appropriate $form key
+ * Due to recursion, the results are stored in the $fieldsets parameter
+ * This will produce a smaller array that can be searched through with less overhead
+ */
+function conditional_fields_node_editing_form_get_fieldgroups(&$form, &$fieldsets){
+  foreach ($form as $form_key => $form_field){
+    if (is_array($form[$form_key])){
+      if (array_key_exists('#type', $form[$form_key])){
+        if (strcasecmp($form[$form_key]['#type'], "fieldset") == 0){
+          // The fieldset fields must map to the original form fields
+          // This allows for modifying the values without having to do a recursive search again
+          $fieldsets[$form_key] = & $form[$form_key];
+
+          conditional_fields_node_editing_form_get_fieldgroups($form[$form_key], $fieldsets);
+        }
+      }
+    }
+  }
+}
+
+/**
  * Alter node form. We do it in after_build for compatibility
  * with non-core CCK widgets
  */
@@ -646,6 +669,11 @@ function conditional_fields_node_after_b
   $required_fields = array();
   $js_settings = array();
 
+  // Find all fieldsets in the form array via a recursive function
+  // Doing this is better than recursively walking the $form array foreach field in the $data array
+  $fieldsets = array();
+  conditional_fields_node_editing_form_get_fieldgroups($form, $fieldsets);
+
   foreach ($data as $row) {
     $controlling_fields[$row['control_field_name']][$row['field_name']] = $row['trigger_values'];
     $controlled_fields[$row['field_name']][$row['control_field_name']] = $row['trigger_values'];
@@ -655,16 +683,17 @@ function conditional_fields_node_after_b
   foreach ($controlling_fields as $controlling_field_name => $controlling_field_descendants) {
     // Check if the controlling field is in the form, user has access to it, and is editable.
     $group_of_controlling_field = conditional_fields_get_group($type_name, $controlling_field_name);
-    $controlling_field = conditional_fields_item_in_form($form, $controlling_field_name, $group_of_controlling_field);
+
+    $controlling_field = conditional_fields_item_in_form($form, $controlling_field_name, $group_of_controlling_field, $fieldsets);
     if (!$controlling_field || $controlling_field['#access'] === FALSE || $controlling_field['#type'] == 'markup') {
       $missing_controlling_fields[] = $controlling_field_name;
       continue;
     }
 
     // Set values on form for themeing.
-    if ($group_of_controlling_field) {
-      $form[$group_of_controlling_field][$controlling_field_name]['#controlling_fields'] = TRUE;
-      conditional_fields_item_apply_theme($form[$group_of_controlling_field][$controlling_field_name]);
+    if (!empty($group_of_controlling_field) && array_key_exists($group_of_controlling_field, $fieldsets)) {
+      $fieldsets[$group_of_controlling_field][$controlling_field_name]['#controlling_fields'] = TRUE;
+      conditional_fields_item_apply_theme($fieldsets[$group_of_controlling_field][$controlling_field_name]);
     }
     else {
       $form[$controlling_field_name]['#controlling_fields'] = TRUE;
@@ -676,7 +705,7 @@ function conditional_fields_node_after_b
   foreach ($controlled_fields as $controlled_field_name => $controlled_field_parents) {
     // Check if the controlled field is in the form and user has access to it.
     $group_of_controlled_field = conditional_fields_get_group($type_name, $controlled_field_name);
-    $controlled_field = conditional_fields_item_in_form($form, $controlled_field_name, $group_of_controlled_field);
+    $controlled_field = conditional_fields_item_in_form($form, $controlled_field_name, $group_of_controlled_field, $fieldsets);
     if (!$controlled_field || $controlled_field['#access'] === FALSE) {
       continue;
     }
@@ -706,8 +735,8 @@ function conditional_fields_node_after_b
           }
         case C_FIELDS_ORPHANED_HIDE:
           // Unset controlled field.
-          if ($group_of_controlled_field) {
-            unset($form[$group_of_controlled_field][$controlled_field_name]);
+          if ($group_of_controlled_field && !empty($group_of_controlling_field) && array_key_exists($group_of_controlling_field, $fieldsets)) {
+            unset($fieldsets[$group_of_controlled_field][$controlled_field_name]);
           }
           else {
             unset($form[$controlled_field_name]);
@@ -735,9 +764,9 @@ function conditional_fields_node_after_b
     }
 
     // Set values on form for themeing.
-    if ($group_of_controlled_field) {
-      $form[$group_of_controlled_field][$controlled_field_name]['#controlled_fields'] = TRUE;
-      conditional_fields_item_apply_theme($form[$group_of_controlled_field][$controlled_field_name]);
+    if ($group_of_controlled_field && !empty($group_of_controlling_field) && array_key_exists($group_of_controlling_field, $fieldsets)) {
+      $fieldsets[$group_of_controlled_field][$controlled_field_name]['#controlled_fields'] = TRUE;
+      conditional_fields_item_apply_theme($fieldsets[$group_of_controlled_field][$controlled_field_name]);
     }
     else {
       $form[$controlled_field_name]['#controlled_fields'] = TRUE;
@@ -757,9 +786,9 @@ function conditional_fields_node_after_b
   // Since required fields validation is hardcoded in _form_validate,
   // we need to unset the #required property and perform a custom validation.
   foreach ($required_fields as $field) {
-    if ($field['in_group']) {
-      conditional_fields_custom_required_field($form[$field['in_group']][$field['field']]);
-      conditional_fields_item_apply_theme($form[$field['in_group']][$field['field']]);
+    if ($field['in_group'] && !empty($group_of_controlling_field) && array_key_exists($group_of_controlling_field, $fieldsets)) {
+      conditional_fields_custom_required_field($fieldsets[$field['in_group']][$field['field']]);
+      conditional_fields_item_apply_theme($fieldsets[$field['in_group']][$field['field']]);
     }
     else {
       conditional_fields_custom_required_field($form[$field['field']]);
@@ -816,26 +845,32 @@ function conditional_fields_item_apply_t
  * Find an item in a form by key. If it's a CCK field, the function
  * will find it using field_info.
  */
-function conditional_fields_item_in_form($form, $item_name, $group = FALSE) {
+function conditional_fields_item_in_form($form, $item_name, $group = FALSE, $fieldsets = NULL) {
   static $items;
   if ($items[$item_name]) {
     return $items[$item_name];
   }
 
+  $haystack = $form;
+
+  if (is_array($fieldsets)){
+    $haystack = $fieldsets;
+  }
+
   if ($group) {
-    if ($form[$group][$item_name]) {
-      $items[$item_name] = $form[$group][$item_name];
+    if ($haystack[$group][$item_name]) {
+      $items[$item_name] = $haystack[$group][$item_name];
     }
-    elseif ($form[$group][$form['#field_info'][$item_name]['display_settings']['parent']][$item_name]) {
-      $items[$item_name] = $form[$group][$form['#field_info'][$item_name]['display_settings']['parent']][$item_name];
+    elseif ($haystack[$group][$form['#field_info'][$item_name]['display_settings']['parent']][$item_name]) {
+      $items[$item_name] = $haystack[$group][$form['#field_info'][$item_name]['display_settings']['parent']][$item_name];
     }
   }
   else {
-    if ($form[$item_name]) {
-      $items[$item_name] = $form[$item_name];
+    if ($haystack[$item_name]) {
+      $items[$item_name] = $haystack[$item_name];
     }
-    elseif ($form[$form['#field_info'][$item_name]['display_settings']['parent']][$item_name]) {
-      $items[$item_name] = $form[$form['#field_info'][$item_name]['display_settings']['parent']][$item_name];
+    elseif ($haystack[$form['#field_info'][$item_name]['display_settings']['parent']][$item_name]) {
+      $items[$item_name] = $haystack[$form['#field_info'][$item_name]['display_settings']['parent']][$item_name];
     }
   }