For IWT to work, you need click to move to be enabled.

The default wizard gets you a CTM that enables when you press the key and disables when you release the key.
If you use this pre-made mapped key, that turns off the CTM... which prevents the imbedded IWT from working.

If it's working for quest guys but not hostiles...
See if it works at a distance, such that your toons have to move to the quest guys.
If they target but cannot move, you know its because the CTM is off.

Personally, I set CTM to always be on.
Basically, delete the wizard generated CTM key (or you could modify it, so the CTM is never disabled).
And I have CTM enabled, on each switch.

The CTM thing, would be my guess.