Try this version. I'm not sure how it will go with subgroups but it appears that you can the set wrapping for multiple selected graphics in a single line and when shapes are ungrouped they inherit the parents wrapping setting.
Code:
Sub Graph_CONVERT_TxtBox_to_WrapSquare_and_Ungroup()
Dim aShp As Shape
Selection.Range.ShapeRange.WrapFormat.Type = wdWrapSquare
For Each aShp In Selection.Range.ShapeRange
If aShp.Type = msoGroup Then aShp.Ungroup
Next aShp
End Sub