Yeah, there's different types of notification.
It looks like the instant notification emails (when you get emailed immediately after someone posts in your thread) doesn't work. There is also a weekly notification summary which should work - did you receive this?
Tbh, it seems a bit flakey in general from vBulletin's side of things. I've read that it won't send instant notification emails when you're using the board (i.e. logged in) as you'll already know by using the 'new posts' feature. But if you just close the browser without logging out, your session stays open for ages and you still don't get the emails. Bit daft really!