No new items created with dropbox enabled

When I add a new child item with the dropbox enabled, only the parent appears in the dropbox and is saved on node submit (even with 'enforce_deepest' => 1). Without the dropbox new terms are created just fine. The vocabulary has simple hierarchy (just two terms to start testing, parent and child).

This is a pretty clean install of 6.12 (with a lot of nodes and terms though). I tried different HS configurations (my current and target configuration below), but couldn't make it to work.

My server is on PHP 5.1.6 if it makes any difference. There are no errors in Drupal log.

$config = array(
  'config_id'       => 'taxonomy-20',
  'save_lineage'    => 0,
  'enforce_deepest' => 1,
  'entity_count'    => 0,
  'resizable'       => 0,
  'level_labels' => array(
    'status' => 0,
    'labels' => array(
      0 => '',
      1 => '',
    ),
  ),
  'dropbox' => array(
    'status'    => 1,
    'title'     => '',
    'limit'     => 0,
    'reset_hs'  => 1,
  ),
  'editability' => array(
    'status' => 1,
    'item_types' => array(
      0 => '',
      1 => 'pod',
    ),
    'allowed_levels' => array(
      0 => 0,
      1 => 1,
    ),
    'allow_new_levels' => 0,
    'max_levels'       => 0,
  ),
);