IDE: Debug/Release settings do not change

Looks like you may have hit one of the known issues which is documented in the errata.txt in the Nios II documents folder:

151588 - Changing active build configuration for a Nios II

project - On the C/C++ build property page, the

configuration dropdown box can be used to select

the active configuration (e.g. Release or Debug).

When the active configuration is changed, this

does not automatically update the rest of the

window containing the settings such as Compiler

flags, optimization level, etc. The user must

deselect then reselect a category (e.g. click on

PreProcessor then General) to see the settings

for that configuration.

Hope that helps.