Office Connector with Document Sequencing Not Working

When attempting to create or open a document in Office Application and save to Aras we get the following error, and none of the Document Dialog files are editable expect the Document Type:

"Document Type "Document" is not configured properly for use with Office Connector (Number is defined as Sequence). Please Contact your Administrator."

The Office Connector is installed, and configured for Sequencing in the Office Connector Settings:

Document Numbering = Sequence

Document Numbing Sequence = Default Document

The Document Item item_number is also setup to use the Default Document Sequence:

What are we missing?