You might check your database to see if the wp_options table actually contains the values you’re entering on your Misc Options page (I’m running 1.2 alpha 11). If not, you might try re-installing, or maybe just run upgrade.php and try re-setting your options (don’t forget the “Update Options” button), or try newer files from CVS (and run upgrade.php). But if the database looks good, I’m afraid I’d be as stumped as you are, probably resort to looking for errors.txt files or experimenting with other settings to see if they’re working or not. Hmm, try setting minimum level to 1. Every once in a while I run the “repair database” and “reload mySQL” in phpMyAdmin for funsies. Good luck!
Incidentally, after researching the pros and cons, particularly having a directory chmod to 777, I’ve decided not to even use this feature, and stick with ftp.
