I am playing on the 20th Anniversary Classic realm.
The bug is:
Interface options, NPC Names, Quest NPC’s selected in drop down box.
The name tags are not showing on Quest NPC’s, for example “The Mindless Ones” Mindless Zombie or Wretched Zombie have no name tag.
I’m having a similar issue, except in my case, no options other than “All NPCs” works. I’d ideally like to use Hostile and Interactive NPCs.
If I use anything other than All NPCs I don’t see any names. This is true for all Classic realms, Anniversary or otherwise. I’ve also tested this on two different computers, one fully fresh install and no addons. Retail works correctly.