Cannot transaction on an item that has a negative available qty even though the org parameters are s

I have backflush transactions that are erroring out in the interface with an error message that states "Total Organization Quantity cannot become Negative when there are reservations present".  The org parameters are set to allow negative balances and the profile option INV:OVERRIDE NEG FOR BACKFLUSH is enabled.  Why are these transactions creating an error when the available qty is negative?

In addition, when I try to delete the reservation on the item to allow for the transactions to be pushed through, I get the following error: 

"The transaction has failed. Another process has consumed the required material. Please delete this transaction record, close and re-open the form in order to re-enter the transaction."