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Just run this query for now:

[code=sql]

UPDATE xf_user_privacy

SET allow_send_personal_conversation = 'members'

WHERE allow_send_personal_conversation = 'everyone'

[/code]

There's a couple of ways we could make changes here. From updating the order of the select drop down so that "Members only" would appear first, or just removing this invalid value from the database on the next upgrade, but the query above should take care of it for now.