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There are a couple of different ways to update a plugin through the WP admin panel – the “update now” link when looking at that specific plugin in the plugin panel (the one that makes the little arrow go ’round while it is updating) does not trigger the activation hook. So there’s a separate upgrade function for that. That function did not have a call to the dialog upgrade function which needs to run for the new dialogs settings. But that is corrected now. Please give the update another try (wait about 15 minutes though as I just updated it and it takes some time for wordpress.org to cycle through and reassemble the zip package) and let me know if that resolves. Use the same method of updating as you did before.

Just a followup to this…

When this was noticed and corrected, less than 300 downloads of the new version had been processed. Presumably, some of these would be new installs (and unaffected by this issue) and some would have been updated via the update panel or the bulk action menu and also unaffected. So for the limited users affected, simply deactivating and then reactivating the plugin would trigger the necessary update function for the dialogs setting upgrade.