this. Chances are it's not running with admin privs and that means that the My Documents folder and subfolders are "protected" and windows won't let the game write to them.
Have you also tried editing the .ini files manually and then making them read only?

Thanks again, fellas. Re-downloading now to see (I'm sure it wasn't but worth a shot) if that was a problem. Then, I'll try the kramer's and no use's ideas. I did check to make sure they weren't read only yesterday. I manually edited the inis, saved and made them read only afterward, but still no joy. I'll try the other ones and that tool too. I've got the newest drivers (but not the beta ones).

I'm looking and finding more folks with the issue at the Bethesda threads but no one official appears to be reading it and those threads go to page 90 after like an hour! I remember now why I got a console to begin with in my old age LOL.

Long shot, but to me it sounds like the folder it's writing the settings too and the folder it's reading from are different. Maybe something to do with User Profiles. I know it sounds weird but it's something I learned in programming that whenever I know I have a variable set somewhere and the output is wrong it's usually because the program is accessing a different variable somewhere.

You can download Sysinternals Process Monitor or what's it called these days, see if Skyrim is really touching the .ini file when you load the game. I do not believe if it's properly reading the file that it would ignore the data.

Unless it thinks the file is corrupt. Have you tried removing everything from MyGames/Skryim, let it recreate these files at first load, then edit them by hand?

Where do you have Steam and Skyrim installed ?
If your running Vista or Win7 and you have it installed in Program Files or Program Files (x86) it could be UAC that's causing problems.
Best not to install any games to those locations then UAC wont stick its nose in where its not wanted.

Not sure if this makes a difference or not. I noticed that you had a check mark in the box for run in windowed mode.

Yeah, I've tried it both windowed and not windowed. I swear, this place is great. People with no reason to help other than the sake of others. I love it. Thanks again.

Almost done downloading it. Will take my boy to a soccer game and run some errands and then try again.

Mark, it is in the Program Files (x86). I'm the owner/admin but if there's something I can do to fix, I'll try.

Will try.

I just reinstalled. I don't have any Skyrim folder in the "My Games" folder in that directory. There is:

Panzer Corps
Civ 5
Wings of Prey

Back to the drawing board I suppose!

Tried that too just now. Same result. No joy.

That will be it then. UAC (User Account Control) treats anything installed there as protected and wont allow changes to it, being the owner/admin doesn't matter. there are ways around it but the best bet is not to install games there in the first place.
As all Steam games get automatically installed to the main Steam folder you would have to reinstall the Steam client elsewhere, A separate drive is best but if that's not possible then another folder on your C drive will do.

Agreed on moving it. Best thing is to have another partition to install your games on. At very least create another directory for games if you just have the 1 drive and partition. Always install there to avoid issues. Vista/7 just don't like games writing to the default directory.