UFT Set to auto submit defects but defects are not created

UFT Version 12.50

Quality Center version: 12.20

In UFT under Tools -> Options-> GUI Testing ->Test Runs

I have checked the box that says "Submit a defect to ALM for each failed step"

I have connected successfully to our QC ALM instance and logged in via the ALM connection.

However no defect is being generated on a failure. There is no failure feedback or message.

Note I can manually submit a defect from the Results viewer by selecting the Add Defect button.

The only issue with is I observed a pop up that says: "You do not have permission to work with Extended Storage repository..."  However there is an OK button and if I hit it I can proceed with submitting the defect.

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