I have a same problem (clients connected can not see each other despite that option being checked).
They do connect to the openvpn just fine (status shows all 4 clients (2 connected through WAN and 2 through LAN)). Firewalls on the clients are off (LAN ones as I'm testing with them for now). Even though I try and ping the correct IPs (as shown by the openvpn status) it still does not work. There is no contact between the clients.
This used to work on 1.2.2 but then I upgraded to 1.2.3 and now to 2.0 beta and no go (both for 1.2.3 and for 2.0 beta). I've tried recreating the tunnel as well as using the old one that worked on 1.2.2 but no go. Clients just refuse to see each other.
This is the client config file if it helps:
client
dev tun
proto udp
remote 192.168.1.1 1196
resolv-retry infinite
nobind
persist-key
persist-tun
ca ca.crt
cert xxx.crt
key xxx.key
ns-cert-type server
cipher AES-256-CBC
comp-lzo
verb 3
Anyway I just have no idea how to continue with this so if anyone has any advice it would be very appreciated.