How to disable Image Uploading v4.1.4

[LVC]

My objective is to offer users only one option for inserting images in a post -- and that is having them linked from a URL with tags -- like the old editor.

OK -- so first thing I do is disable the advanced Image Pop-up - according to note --- "Disabling this option will display the legacy from URL attachment dialog" this is good! Exactly what I want!




OK so I saved it and went to the editor to test.

I click on the insert an image icon and the correct legacy pop-up displays



I paste a URL



I hit the OK button --- and I get the invalid URL message and the image does not post




So how can I fix this? I have a music gear website that I just launched -- and I do not want to host a million pictures on my server -- so I need the legacy from URL attachment dialog to be the default -- and I need it to work.

Am I doing something wrong?
Is this a bug?
Is there a fix?

Thanks for taking the time and looking at this.