Currently idevaffiliate automatic account creation only creates affiliate accounts upon user creation - if a user signs up for a particular membership level with this setting on. However it does not if the admin manually assigns them to a new level, or they upgrade. In the example shown at the link below, with bronze, silver and gold levels, it would be common place for a bronze member to upgrade to silver, which thus should create an affiliate account. Manually creating the account defeats the whole purpose of this feature.
Thank you for this suggestion! This feature request or some aspect of the functionality suggested is currently being reviewed for possible inclusion in a future update. If there is additional information, this post will be updated to reflect it.