How to create a list of folders based on a list of foldernames in a text file?

In this case create location might be better than create record with as you could create groups and sub groups in one go. Make sure that slashes in your sub group names are escaped! Select the record containing the group names, run the script and you’re done.

-- Create groups based on selected text record

property theSubGroup_Locations : "1
1/1.1
1/1.1/1.1.1
2
2/2.1
This group name contains a \\/ and \"quotes\"
"
tell application id "DNtp"
	try
		set theSelection to selection of viewer window 1
		if theSelection = {} or ((count theSelection) > 1) then error "Select one record."
		set theRecord to item 1 of theSelection
		set theText to plain text of theRecord
		if theText = "" then error "Select a record with text."
		set theGroupNames to paragraphs of theText
		
		set theGroup to display group selector "Create groups in:"
		set theGroup_Location to (location of theGroup & name of theGroup) as string
		
		set theSubGroup_Locations to paragraphs of theSubGroup_Locations
		
		repeat with thisGroupName in theGroupNames
			if thisGroupName contains "/" then set thisGroupName to my replace_String(thisGroupName, "/", "\\/ ")
			set thisGroup_Location to (theGroup_Location & "/" & thisGroupName) as string
			set thisGroup to create location thisGroup_Location
			repeat with thisSubGroup_Location in theSubGroup_Locations
				create location (thisGroup_Location & "/" & thisSubGroup_Location) as string
			end repeat
		end repeat
		
		display notification "Groups created"
		
	on error error_message number error_number
		if the error_number is not -128 then display alert "DEVONthink" message error_message as warning
	end try
end tell

on replace_String(theText, oldString, newString)
	local ASTID, theText, oldString, newString, lst
	set ASTID to AppleScript's text item delimiters
	try
		considering case
			set AppleScript's text item delimiters to oldString
			set lst to every text item of theText
			set AppleScript's text item delimiters to newString
			set theText to lst as string
		end considering
		set AppleScript's text item delimiters to ASTID
		return theText
	on error eMsg number eNum
		set AppleScript's text item delimiters to ASTID
		error "Can't replaceString: " & eMsg number eNum
	end try
end replace_String