Just one of a number of things you may want to do before a radical upgrade of some kind.
I'll employ a screen Snip program (and/or the print screen "screen dump" buttons) often, also, and trim the result after pasting what gets sent to the "clipboard" to a new image within a picture editing program.
Since IE overlaps other "shelled out" programs in Windows such as Windows Explorer, etc., this security option may be blocked at the operating system level, which would probably override the IE program "options."
I've done with IE in favor of Firefox and/or Chrome as default browsers, for the time being, since the latter is an over-programed memory hog with too many proprietary add-ons.
Since I have reinstalled IE8 and tried system restore I thnk you are right. I think this function is being blocked by soemething else on the computer.