The options are disabled because something in settings is preventing it. Did you set up some kind of administrator function or anything else in security?
The only way to fix that is a factory reset.... If you didnt modify any of the security settings, its possible an app did it, but i could see that only if you're rooted. You may want to wait for more input- i don't know if trying to factory reset with encryption or other security in place will affect it.
It may also help if you backtrack through what you did with security, if anything, also if you're rooted or running a custom ROM. I've never set up any extra encrypt or admin on my devices, so I'd make sure security wont be an issue when you reset it.
