Go back to the Main menu. Select a mission or campaign, choose, Cadet mode. (You don't have to start the mission.) Now go back the the Mission Editor and you should be able to see the yellow waypoints on the screen. The Mision Editor defaults to Veteran mode and there is no way to change it without going out and in again.
The "Show waypoint" bit in the waypoint screen refers to whether the waypoints appear on the map.
Remember that a player in Veteran mode will not see the waypoints. Make sure your mission will still work correctly.