According to description, Search engine friendly URLs will work only on Apache and Lighttpd servers.
I have LiteSpeed and it's working fine - maybe it could be added in description? Or this function needs some addons installed on server that are not added by default?
That function changes links to index.php/topic,1.0.html from index.php?topic=1.0 for the boards and topics links. Apache deals with those links without any need for a mod_rewrite rule. Those links would work on Nginx as well but only with a rewrite rule in place.
For your LiteSpeed server, did you have SMF installed at some point and add any rewrite rules? If not and it "just works" then we can add that to the allowed configurations.
Honestly I'm not sure even having that option around is worth it, I don't think its relevant this day and age for SEO