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Hello @sailahen,
Let me address your questions one at a time:
1) By default WordPress automatically applies maximum image width of 2560px. The Maximum Image Width functionality in our plugin allows you to override this setting but only if the uploaded image size is larger than the listed ones. If the size of the uploaded images is 1280px most probably this is their original size which is less than the available options. In this case, the image will not be resized. Another possibility is for the default maximum image width to be overridden by another plugin installed on your site.
2) This is a small misfunction that happens after an update. It can be easily resolved by simply choosing one of the options. This will fix the issue and you will be able to set the option at the desired size afterward.