Ah yes, this old chestnut. The "always show" field has nothing to do with seeing yellow boxes on your monitor. It refers to whether the waypoint appears on the map.
You do indeed have to select Cadet mode manually from the Single Missions screen (or elsewhere) to put the Mission Editor into Cadet mode.
When designing your mission, do not use player waypoints to make things happen - use triggers instead. Veteran mode players won't see them, and both Vet and Cadet mode players may wish to do things slightly differently from the way the waypoints suggest, which will screw things up if the waypoints do anything.