BenFlarum I'm unable to replicate the issue when using the same values on my test website on Flarum 1.2.
Make sure the user has permissions "Start discussions without approval" and "Reply to discussions without approval". User must only be denied "Post without first post approval" permission for this extension to trigger.
EDIT: to address the deleted post question, it's absolutely intentional. The recorded number of approved posts never goes down by design, as you don't want to lose posting ability just because a post was deleted after being successfully approved.