Groves was sacked as Town manager earlier this year and was swiftly loaned out to Scunthorpe before making the move permanent with a contract until the end of last season.
Despite helping the Iron avoid relegation, ironically at the expense of York, Groves was not offered a new deal at Glanford Park.
York boss Chris Brass, no doubt advised by assistant Nogan, made his move for Groves as he looks for valuable experience in his team.