Free shipping coupon showing $0 and shipping still be added

Hi, would greatly appreciate any advice on this one.
When I create a coupon to give customers free shipping my flat rate shipping seems to still apply and the coupon shows as $0. So it looks like this:
Sub-total $39.95
Flat Rate Shipping $9.95
Coupon: $0
Total: $49.90

I have installed the Automatic Shipping extension that I thought might be the problem, but when I disable that extension, the problem remains.

I am using v1.5.4.1

Not sure where I am going wrong. I have copied the settings from the admin demo of open cart in trying to get it to work.

Thanks