The list of labels on the left allows you to *view* a subset of conversations that match a specific label. To *assign* labels to a conversation, there is a separate label icon in the upper right of the page, above the posts. However, assigning labels is currently limited to only "group owner" and "group moderators", so this icon probably does not appear for regular group members.
If I enable this option for group members, it should then allow anyone to select one or more labels for a given conversation. However, as we saw in the past, this might produce undesirable results because it also allows people to *create* whatever new labels they want rather than just choosing from the existing labels. If you recall, I had to go through over 100 different labels to reduce the list to just the most relevant and meaningful ones -- eliminating typos, misspellings, singular vs. plural labels, as well as unique labels that had only been used for one posted message. If there is a way to allow group members to *select* labels without also allowing them to *create* new labels, then I will enable this setting. I will discuss this with Jeremy to see what he thinks.
-e