Forgive me, I didn't explain myself very well. The Setting Adjustment is another tab in the Editor (labeled "Setting Adjust"). That's where the Use Factions? checkbox I was referring to is located. I've attached a zip file with an .hl file that contains a Setting Adjustment that fill fix this.
From your second comment, it sounds like I need to take a look at Hellfrost... It shouldn't be seeing those. But more on that later.
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