Works fine on vB4.2.3. If you're using the same vB version & getting errors, it's probably because something to do with the server side (ask your webhost), another mod clashes with this or you didn't install correctly.
The wording is a little confusing in the admin CP.
So here's an example of my settings & I'll explain what it means:

First setting = Enable? Yes or No.
Second setting = Whichever usergroup you tick, will not be able to use the PM feature at all:
http://i.imgur.com/9stRgWH.png
Note: You (even as an admin) can send PMs to this user, but they will not be able to open up the message until their usergroup is changed OR the option is unticked.

First setting = Enable? Yes or No.
Second setting = Can not send PM's if they have lower than X posts. X: 10 in the screenshot.
Third setting = Users who have this restriction imposed on them can not PM or view their PMs until they have X or more posts.
The next two is just for Visitor Message (VM) instead of Private Message (PM).

Note: The user can still see others VM them though:
http://i.imgur.com/JBst4q7.png