I have a party of six that has finished the 3 basic scenarios and the first of Burnt Offerings. I wanted to try quest mode but these characters are not available under the experienced section. Is this working as intended and I have to use a different group in quest mode or is it a bug?

You have to remove those characters From another croup.

Aka, if character is adventuring in one croup he is busy and can not at the same time be adventuring in another.

It's not a bug. Quest mode characters are separate, because they earn bonuses in a different way, so you have to start from scratch.

True. They Are separate games totally. I should read these questions better...