Auto correct doesn't work anymore, please help

[Aluminum213]

it still underlines incorrect words but doesn't autocorrect like it used it. For example: ipad, iphone, ipod, aren't automatically changed to iPad and still have the underline

when I right click autocorrect is checked under the spelling and grammar

 

[ZacNicholson]

go into settings and make sure it looks like this

 

[Aluminum213]

With the exception of the "teh" option, which I don't have, it's exactly like that

 

[Ddyracer]

I have the same problem. Same settings as well. I did disable it in lion via Terminal i guess the OS got confused.