I have found a solution to this issue (netplwiz not showing the 'Users must enter a username and password to use this computer. However, it involves a registry modification so it’s not something that can be entertained lightly.
If you use regedit to edit the registry, you can navigate to: Computer\HKEY_LOCAL_MACHINE\SOFTWARE\Microsoft\Windows NT\CurrentVersion\PasswordLess\Device. There you should see a value called DevicePasswordLessBuildVersion. Double click on this to edit it and set the value to 0 (making a note of the previous value which was 2 on my laptop). Close regedit and reboot the computer.
After loging in again, netplwiz should offer the required option.
As with any operation involving registry edits, extreme care must be taken and it should not be undertaken if you are risk averse.