I just had to use this functionality today itself. And it works absolutely fine when enabled in my Org.

Initially all files uploaded when getting dumped in 'Attachments' & then when i enabled it, started to get dumped in 'Files' object.

Check if there is any access/permission issue to your user/org which maybe causing this.

I just had to use this functionality today itself. And it works absolutely fine when enabled in my Org.

Initially all files uploaded when getting dumped in 'Attachments' & then when i enabled it, started to get dumped in 'Files' object.

You have to do some additional steps for legacy files.

Refer below link - https://blogs.perficient.com/2018/11/02/transitioning-from-notes-and-attachments-to-files-in-salesforce/