[Use param ...] Content Type Does Not Reflect Selection

When I create a new content type and I select FAQ as the allowed Item Layout it stays as "Blog" after I save it.

Shouldn't it reflect the layout I designated? See my screen grab.

Is what's happening ok or this this an issue with my server/install?

you forgot this :
-this option is for allowed to CHANGE template
-scroll down and select the template by default for this type

Hi I think that option is given - only for you to decide the template styles that you are going to allow while editing items belonging to this field - let's say in the item form.

Imagine this situation - lets say you are trying to edit an item("Artists in California and beer") belonging to this particular type - "Artist" then the option that you have chosen will take care that you can choose only "artists" template because that is the only option you have allowed in the drop down.

This setting will not allow you to change the templates of all the items belonging to this one type -"Article" all of a sudden - if that is what you are trying to accomplish!

"One Item can take any one of the templates - but it can take only one! So all the items does not have to take the same template" I hope you get this!

So what is the importance of that option you may ask?
Let us say you have ten different templates, and you don't want the "author(could be you or your friend)" who is editing the items belonging to the type "article" to choose all the templates - may be you only want him to be able to choose one among the three templates - so you will have to hide the rest of the templates so you go to this option and then choose only those three templates and while editing the items belonging to "Artist" type he will only see those three templates in the drop down.

Let us come back to the real question - where do i change the default Item layout/ Template for that Item
It is at the end of the page - i mean the page you put up in the figure scroll down - after the Items Manager Configuration

Layout Selection
NOTE: This list contains template names,
since EVERY template contains ONE layout of every kind.
So there is ONE item layout, ONE category layout, etc, etc

There you can set the default template that a new item created with the "artist" content type could take - if you can open "artist" type you can still see that the setting is set to "blog" please change that to the required template type

NOTE: Please note that just because you changed the template type from "blog" to "artist - template" all the items belonging to the "artist" content type would not magically change their templates to "artist - template" the old ones will remain in their old templates ("blog" or "whatever") but the new items that you create in this content type will be created with the "artist-template"

Hello

the parameter that you show is the "Allowed" templates

the parameter for the template used is at bottom right