dhcp server does not work on an interface

Thanks Pukkita and darkprocess.

Pukkita, This is a RB201Uais without the wireless. Firmware is 6.35.4 stable. You are right, this is a simple config. I will try making ether2 as the LAN and try it out.
Darkprocess, I did not want to create a bridge because I wanted to use the switch chip instead of the cpu doing the work. I read somewhere that setting it up on the physical interface gave me wirespeed.

A little confused on what could be going wrong here.

Thanks
tiker