Patch \thenomenclature to do also \itemindent 1em:
\documentclass{article}
\usepackage{nomencl}
\usepackage{xpatch}
\patchcmd{\thenomenclature}
{\leftmargin\labelwidth}
{\leftmargin\labelwidth\itemindent 1em }
{}{}
\makenomenclature
\begin{document}
a\nomenclature{ALE}{Arbitrary Lagrangian-Eulerian Method}
b\nomenclature{AOR}{Angle of repose}
\printnomenclature
\end{document}

Since your group labels are typeset with \item, then you have also to change them so they skip back by the current \itemindent:
\newcommand{\nomenclheader}[1]{\item[\hspace*{-\itemindent}#1]}
\renewcommand\nomgroup[1]{%
\ifthenelse{\equal{#1}{A}}{%
\nomenclheader{\textbf{Acronyms}}}{% A - Acronyms
\ifthenelse{\equal{#1}{R}}{%
\nomenclheader{\textbf{Roman Symbols}}}{% R - Roman
\ifthenelse{\equal{#1}{G}}{%
\nomenclheader{\textbf{Greek Symbols}}}{% G - Greek
\ifthenelse{\equal{#1}{S}}{%
\nomenclheader{\textbf{Superscripts}}}{{% S - Superscripts
\ifthenelse{\equal{#1}{U}}{%
\nomenclheader{\textbf{Subscripts}}}{{% U - Subscripts
\ifthenelse{\equal{#1}{X}}{%
\nomenclheader{\textbf{Other Symbols}}}% X - Other Symbols
{{}}}}}}}}}}
You'll probably have less problem in maintaining the code above if you say
\usepackage{xstring}
and then
\newcommand{\nomenclheader}[1]{%
\item[\hspace*{-\itemindent}\normalfont\bfseries #1]}
\renewcommand\nomgroup[1]{%
\IfStrEqCase{#1}{%
{A}{\nomenclheader{Acronyms}}% A - Acronyms
{R}{\nomenclheader{Roman Symbols}}% R - Roman
{G}{\nomenclheader{Greek Symbols}}% G - Greek
{S}{\nomenclheader{Superscripts}}% S - Superscripts
{U}{\nomenclheader{Subscripts}}% U - Subscripts
{X}{\nomenclheader{Other Symbols}}% X - Other Symbols
}%
}
Complete example
\documentclass{article}
\usepackage[intoc]{nomencl}
\usepackage{bm}
\usepackage{xstring}
\usepackage{xpatch}
\patchcmd{\thenomenclature}
{\leftmargin\labelwidth}
{\leftmargin\labelwidth\itemindent 1em }
{}{}
\newcommand{\nomenclheader}[1]{%
\item[\hspace*{-\itemindent}\normalfont\bfseries#1]}
\renewcommand\nomgroup[1]{%
\IfStrEqCase{#1}{%
{A}{\nomenclheader{Acronyms}}% A - Acronyms
{R}{\nomenclheader{Roman Symbols}}% R - Roman
{G}{\nomenclheader{Greek Symbols}}% G - Greek
{S}{\nomenclheader{Superscripts}}% S - Superscripts
{U}{\nomenclheader{Subscripts}}% U - Subscripts
{X}{\nomenclheader{Other Symbols}}% X - Other Symbols
}%
}
\begin{document}
Some text for getting output.
\nomenclature[rV]{$V$}{Fluid control volume}
\nomenclature[ruf]{$\bm{u}_f$}{Fluid velocity}
\nomenclature[gepsilonf]{$\epsilon_f$}{Fluid porosity}
\nomenclature[rfb]{$\bm{f}_b$}{Body force per unit volume}
\nomenclature[gepsilonf]{$\epsilon_f$}{Fluid porosity}
\nomenclature[gsigma]{$\bm{\sigma}$}{Cauchy stress tensor}
\printnomenclature
\end{document}

\renewcommand{\nomlabel}[1]{\hspace{1em}#1}? Seems to be a bit of a hack, though... – cgnieder Jan 19 at 17:17Acronymsis also indent. As I have redefined the\nomgroup, how do I only make the symbols indent? – KOF Jan 19 at 17:24