Hi,
Thanks for the feedback. Your diagram is correct, but there is a bug in the parser.
This has been just fixed in last beta https://dl.dropboxusercontent.com/u/13064071/plantuml.jar
The fix will be included in next official release.
As temporary workaround you can remove heading spaces at "note right on link" and "end note" lines :
[*] --> SubState
state SubState {
[*] --> State1
State1 --> State2
note right on link
hi
end note
State2 --> State3
}
OtherState --> OtherState2
note right on link
hi
end note
Thanks again!