I can also verify that the conflict is between 3.3.2 and carbonite quest. It is "losing" the settings for track quest and auto update quest from wow's settings. Enabling these features with all addons enabled, then reloading ui disabled them. Disabling all addons, rechecking those options and reload again was fine, they stayed enabled. Enabling ONLY carbonite rechecking reloading again disabled them.
Hopefully it can be resolved with an updated carbonite quest module once the problem is found. I'd hate to have to go back to using the 4-5 addons carbonite replaced, you have a wonderful addon here, and I would like to thank you for the great work and dedication on it.
EDIT:
Ok, after having followed the advise of Texafornian above, removing the saved variables SEEMS to have worked for me as well. Only prob now is i have to remember all those settings i changed. SO, after some playing around (I noticed something and thought i'd try it), I moved the now fresh .lua and .bak to a new folder on desktop, then moved my OLD files back into /SavedVariables folder resetting the problem, then went into carbonites options, under Quest Watch, UNCHECKED the very last option of "Modify Game Objective Settings: Instant, No Autowatch". Again I checked the default wow settings, reload ui and they stayed checked. Tested it with A quest, and now SEEMS to be working as it should (pre 3.3.2). Ill edit again with a little further playtime and testing to see if it truly updates now as it should.
EDIT 2:
Ok, after having completed 5 quests in Zangamarsh, none of which were updated as they were turned in (often duplicating in my quest log as if i had just accepted the quest and not turned it in) I can say that with my OLD lua files the problem lies in the "Modify Game Objective Settings: Instant, No Autowatch". (see above). They now track as i gain items in multi-item quests, they update as they should, and the go away upon turn ins. I honestly don't know if this was a setting I checked playing with the settings, or if because I have Vista and it somehow checked itself (doubtful). I update my girlfriends addons and she has a pretty much identical carbonite setup as mine, yet shes not had a problem with this "bug" (or PEBKAC). So anyway.... check that setting eveyone with this issue, that is LIKELY the culprit. Although I'd like to point out Carb, that you said this addon doesnt hijack default settings yet thats exactly what that option does. You may want to remove it in a future release, just a thought... still thanks for one of THE BEST EVER addons for wow. Cheers mate!