Make sure that the email that the moderator notice was sent to is linked to the Yahoo account you are using. Go to the My groups page to see the profile and email address used on that group:
If you need to link that email address to your Yahoo account, use the Membership Wizard:
If you don’t see the address, add it by clicking “add a different email address”.
sounds like they forgot to give you priviledges, and you’re a moderator, not co-owner.
I would get back in touch with the group owner to ask them to double check to see if the privileges that you were given were saved so that you can start being a moderator.
If they say that you have all your privileges then I would recommend getting in touch with a Yahoo Groups customer service representative to see if they can help you to figure out what is going on.