The plugin works now. Thanks for your help.
That wouldn’t explain why I see the ads when I insert the code directly into the post. I will try the updated version.
It will work on your browser if your browser saves the adsense password. Try using a different browser where you have not logged into adsense or just delete cookies and saved passwords. Try again and you will see that adsense does not display.
That’s how I first noticed this issue. By viewing my site on a different computer where adsense pwd was not saved.
All in One Adsense is not compatible with WP 2.7. I did find one adsense plugin that does work on WP 2.7: WhyDoWork Adsense Plugin.