YES the layout menu is still not work and will not work yet in JMS 1.2.35 that we will release soon.
We have not yet found how to have something compatible between Joomla 1.5 and 1.6 for this part.
You can use the layout in the front-end but you can not install additional layout in 1.6.
As we have not yet published additional layout, we given a lower priority to this part.
I remember you that we still consider JMS 1.2.34 as an alpha for Joomla 1.6.
See the release note that mention what is supposed working correctly.
www.jms2win.com/faq/change-history-v12x
A full Joomla 1.5 and 1.6 is not yet available and we working on it as you can see.