VC 1.6 will only announce calls over the BT headset on WM5.3+ due to support for inband ring tones in that build. If you're running something prior to 5.3, the incoming phone call announcements will not occur over bluetooth regardless of the settings. At or after 5.3, the settings work as exepcted.

Try uninstalling on the PPC and reinstalling.

Also, I'm guessing that you're using a 6700 and not a 6600 as the 6600 was not a Windows Mobile 5.0 based device which is a requirement for 1.6