I went back to Site Permissions and changed all the usual groups (Admins, Mods, Users) from 100 to 1001 and all is working again.
I consider this a bug.
(Remember I had cleared my inbox and others were still seeing the message when PMing me.)
What I think is happening is that when you DECREASE the number of allowed PMs, some old state is still hanging around confusing UBB. To fix the problem you must return the count to greater than or equal to the original number (I don't know which) .. I know Greater Than works.