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Hi Dave, sorry for slow reply but I've been crazy busy here.
To answer your question, yes I am using Extended Profiles module. This module is the best thing since sliced bread IMO and it gives me the best possible control and customisations over my members accounts and profiles.
I think I should also explain that the I was trying to use that checkbox to assign account editing priviledges to a site member who needs to add/edit user accounts but I need to block his ability to mess about with system/module configurations (which is why I cannot give him full admin access)
Do I understand correctly that the "Edit Users" checkbox is redundant now so there is no need for me to worry that I cannot activate that checkbox? And I can give this member full user account management access just by assigning his user group access to the Extended Profiles module?
Thanks again for all your replies.