Even curiouser. That preference was added in 3.5.0, and 3.5.3 fixed a bug that could lead those same PHP warnings:
Fixed a bug in the 3.5.0 update routine where the new email_newline and email_smtp_crypto settings might not be copied to all sites in the Site Manager, resulting in PHP warnings until the Email settings are saved in each Site.
Are you using the Site Manager on this install? Are you able to replicate the issue on another database?
Ok, using that bit of info you provided I went into the CP to the “Outgoing Email” settings page, didn’t change anything, and just clicked Save. Then tried the auto-updater again and it worked fine.
Worth noting that my demo site db has been around since before 3.5… I just kept upgrading and updating the base db file used to generate the site.
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