I just installed it on 3.6.4 and it works fine, though I had to do what Revpolar suggested above before the option showed up in the PM page.
Quote:
Go to your usergroup manager and set both options for PM attachments to no save and go back and set it to yes again and save.
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However, people have told me that their archived private messages that had attachments on them have now lost their attachments. Anyone have any suggestions?