It took some digging to find this info so I wanted to repeat it here so I’d have access to it as well as anyone else.
The problem is that in Flash it won’t export png sequences images of movie clips dropped in the main timeline. It is obvious it won’t work since when you slide from frame to frame the movie clips don’t change. Here are the step to get the movie clips to change as well as help export the png sequence.
1) Create your animations however you like (nested symbols etc)
2) Drop them on to the stage
3) Select all instances on the stage and change their type to “Graphic” from the property windows
4) Make sure that your main timeline has as much frames as your longest nested animation, that is, just add a key frame on your main timeline at that point. The number of frames that the png exporter exports is equal the number of frames on your main timeline and blatantly ignores the frames of the nested movie-clips. So you have to manually specify that number.