When a menu item is set to Hidden (that is if the option "Display in Menu" is set to No, that menu item and its sub-menu items show. With core Joomla when a menu item is set to Hidden, it does not show in the menu rendered.
This happens when MegaMenu is NOT used.
The issue could be tracked to the files named t3bootstrap.php and t3bootstrap.tpl.php that are located in the directory \plugins\system\t3\includes\menu.
Kindly review the logic in the file helper.php that is located in the directory that hides the Hidden menu items and their child/sub-menu items.