Can't create Channels

I need to create a few more channels on the site. We intend to have a setup where all channels are a set structure and no one but site admins has the "create channel auto" permission. We have a few existing channels that were created a long while ago. For some reason, no method of creating a new channel seems to work. I create a label - and it becomes available to be added to my profile , but it doesn't turn into a channel. I made sure the auto channel permission was turned on, and I created posts with hashtags, and no channels were created. I even tried creating a new top level label and putting an existing channel inside it to see what would happen with the breadcrumb link. It shows the name of the new top level label in the breadcrumb link, but it isn't clickable.

Is there a setting somewhere that needs to be ticked on to make it so that all labels become channels?