I can't think of anything that would cause this behavior. Try exiting LabVIEW, deleting your LabVIEW INI file (back it up first, of course) and restarting LabVIEW. If the debugging options work OK, then there's something weird in your INI file. At that point, try removing certain lines from it between exiting and restarting LabVIEW to determine what is causing the weird behavior.
Did you end up solving the problem with my suggestion? If so, what was the offending line in the INI file? Or was it a user permissions issue?