As mentioned, it may work now. I haven't tried it in a while as I made a hack shortly after discovering it broken (as evidenced by my provided thread, it was very recently at the least)
I had your screenshot confused with the guy (I think hat?) who had it on automatic, apologies for accusing you of having that setting, I just couldn't come up with another explanation.
It's also a possibility that disabling the update service alters it's behavior, though that makes the least sense of my potential explanations...
Unnecessary, and really, just do it if you're going to don't make it into a humiliation thing. Also, don't blame me if you miss my awesome deals.
EDIT: As an aside, it still does not work for me, I'm getting regular driver updates offered and have the setting in the same position as you as soon as I remove my registry tweak. Of course, you know how tweaks go, I may have broken something else...
Of course, I never disabled the WU service. I just used a GP settings to make it not auto check. Maybe this is different in how it treats it?