Set up Bluetooth Keyboard

I’m trying to set up a Bluetooth keyboard on a Macbook Pro 13". I would like to make both caps lock and ctrl be ctrl. First, I verify it is connected in the Bluetooth section of system preferences:

Then I go to the Keyboard section of System Preferences click “Set Up Bluetooth Keyboard" at the bottom left and a dropdown appears:

I select my keyboard:

At this point I've tried double clicking (does nothing), and pressing "Done" which just dismisses the drop down. I've also tried renaming the keyboard, but that didn't help.

Any ideas?

TIA, Thomas