Yes, it is the correct setting how to make that option "Notify subscriber" appear on the composer right panel. (screenshot :
https://take.ms/CiWrI)
Actually that is not a bug, when you switch the setting it doesn't affect on your existing blog post.
For example : If your existing blog post already set those option to disabled, when you turn back on "Entry Subscription" setting, it won't automatically enable back this setting from the existing blog post.