I just jumped into a group of friend's campaign that is about half-way over, having never played the game before (just 1 round of Skirmish the night before), and afterwards I read through the Getting Started guide and the Rules Reference, and I think they might be playing a rule wrong.

They told me that when a character uses Rest, at the end of that activation, the game checks if that character rested and then heals strain equal to the endurance level, healing damage if strain < endurance. Meaning you can't recover strain before performing your second action and that it's impossible to gain the benefits of resting twice in the same turn. However, I didn't see anything in the rules about it working that way, and the few IA campaign videos I've watched allowed double-resting.

Is my group making a mistake about resting? It might explain why my Diala didn't feel very effective in my first game. (Also didn't help that they didn't tell me about Recovering with Surges).

I don't know if this is a cerryover from Descent or some other system they are used to, but this is wrong. The Rest action like any other is resolved immediately, and you can take the action twice for double the benefit.

YOU are correct. You can double rest if you want to and you can recover strain with surges, 1 strain for a surge per attack, meaning if you attack multiple times each attack you may recover a strain via surge if you wish to.

In games where you play with 2 activation tokens on heroes they can rest 4 times if they want to in 1 round, 2 per activation. So let them know they are mistaken.

It's clear in the rules, I don't have them on me to quote, but any 1 here will tell it to you.

There are two places in the rule books you can quote when your friends say that the forums here are wrong.

Learn to Play Guide, pg. 16:

Actions:
During the action phase, players alternate activating figure groups, starting with a Rebel player. While activating a figure, it receives 2 actions and can use them to perform any combination of the following:
• Rest: Recover [strain] and possibly [damage]. Only heroes can perform a rest.

(There's more listed in the book, but you can see that Rest can be used twice.)

Rules Reference Guide, Pg. 3:

Actions:
• A figure can perform the same action multiple times during the same activation except as follows:
- A non-hero figure can use only one of its actions to perform an attack per activation.
- A figure can perform each special action only once per activation.

... character rested and then heals strain equal to the endurance level, healing damage if strain < endurance.

Not sure where you got this, but this is incorrect.

A short procedural code for resting would look something like this:

*) Rest action

*) Check Endurance

*) Recover <Endurance Value> Strain

*) If recovered Strain > <Current Strain>: Recover <Endurance Value> - <Current Strain> Health

This means when resting, you recover All your Strain. And if you weren't maxed out on Strain, you recover the difference in Health. This can be done on the first action and happens immediately. You can use your 2nd action to recover Health if you chose too.

Just always keep in mind, Resting Twice eats up a whole Heroes Turn, and so...that's one less round when trying to complete a mission that can have limited rounds. Time is precious. Use it wisely.