In Part I, I covered how to create a traditional outline list. Now I'm going to walk through the steps of creating a multi-level list frequently used in academic papers, user guides, and military documents.

Overview
As is the case with an outline list, you need to define a list and then create a set of paragraph styles that reference that list. Defining lists allows you to have multiple lists in a document that don't interfere with each other. For example, you could create multi-level headings, an outline, and separate lists of tables and figures within the same document, all of which use a separate numbering sequence.

In this example, we need to create three different paragraph styles that all refer to the numbered list we define.
Step 1 - Define a list
To do this, choose Type > Bulleted & Numbered Lists > Define Lists. Click New, and type the name of the list. If you want numbering to restart when in different stories or documents, deselect one of both options, and click OK. When you define the paragraph styles, you'll reference this list.

Step 2 - Create the first paragraph style
In the Paragraph Styles panel, click the Create New Style icon, type the name of the style (such as "Level 1").
* Define the heading attributes, such as the font style. For example, I made the headings bold in the Basic Character Formats section, and I added a Space After value in the Indents and Spacing section.
* Click the Bullets & Numbering section, choose the list you defined from the List menu, and specify level 1.
* Specify the Number format. In my headings, I prefer using an em space instead of a tab, so I deleted ^t and chose Insert Special Character > Em Space from the flyout menu to the right of the Number field. ^#.^m means the current level number (1) will be followed by a period, which will be followed by an em space.

Step 3 - Create the second-level heading style
Follow the same steps to create a second paragraph style. To simplify matters base this style on the first style you created, and then make any changes.
* In the Bullets & Numbering section, make sure the list you defined is selected, and choose Level 2.
* Place the insertion point at the beginning of the Number field, choose Insert Number Placeholder > Level 1 (or just type ^1), and then insert a period. ^1.^#.^m means the first level (1) will be followed by a period, which will be followed by the current level number (2), which will be followed by a period, which will be followed by an em space.

* Modify the Number style to suit your needs. For example, if you wanted to use a hyphen instead of a period (1-1, 1-2, 1-3...), the Number field would look like this
^1-^#.^m
Step 4 - Create additional heading styles
Follow the same process to define the rest of the paragraph styles. For the third style, insert both ^1 and ^2 in the Number field.

Step 5 - Apply the heading styles to text
Apply the heading style to headings, and make any adjustments. For example, you may want to specify a different Next Style (such as Body) for the heading styles so that when you press Enter after typing the heading, the Body style is automatically applied to the next paragraph.
Tip: In Part I, I mentioned that if you need to restart numbering within the same story, you should create a paragraph style identical to the Level 1 style, only with the numbering starting at 1. Depending on your layout, there may be a better way. If another style will always appear between the lists (such as "step heading"), specify that style as the level 1 style, and choose None for Numbering Style Format.
Next, I'll write about creating lists of figures or tables.

worked.