Never use the setting "Enable when web host requires "Mail From" strictly tied to domain email account." unless you have to to even send mail.
Maybe another plugin is conflicting.
Look on the Admin – Plugins – menu.
Temporarily Disable (not uninstall) all your other plugins.
Does it work now? If yes, Activate the plugins one by one to determine which one conflicts.
The theme you are using could be causing it...
Do this as a test:
In Admin, click on Appearance, Themes.
Temporarily activate your theme to a WP default one...
"WordPress Default" theme(default for WP 2.0+), or
"Twenty Ten" (default for WP 3.0+), or
"Twenty Eleven" (default for WP 3.2+) or
"Twenty Twelve" (default for WP 3.5+)
It does not cause any harm to your WP to temporarily change the theme test and then and change back.
Does it work properly with a default WP theme?
If it does then the theme you are using is the cause.