Certain Accounting Preferences for Drop Shipment are Disabled within the System

Answer:

Under Setup > Company > Enable Features > Accounting: The Automated Intercompany Drop Ship feature is enabled.  If the latter feature is enabled, the system automatically sets specific values for the following preferences which cannot be changed for intercompany drop ship workflow to work correctly:

a. Update Drop Ship Order Quantities Automatically Prior to Shipment

b. Drop Ship Fulfillment Quantity Validation

c. Allow Both Mark Shipped Fulfillments and Receipts on a Drop Shipment Line