2 finger scrolling not working OS X Lion

We have tried all the other gestures but the two finger scrolling does not work after upgrading to OS X Lion. The scroll bars are also always visible. Any ideas as to why this is happening? We are using a MacBook Pro 2.8 GHz Intel Core 2 Duo.

We have never used an external mouse of any kind.

These are the options we have selected in the Trackpad settings:

Under Point & Click we have checked:

Look up

Under Scroll & Zoom we have the following checked:

Scroll Direction

Zoom in or out

Smart Zoom

Under More Gestures we have the following:

Swipe between Pages - Swipe with two or three fingers

Swipe between full-screen apps - Swipe left or right with four fingers

Mission Control - Swipe with four fingers

Launchpad - Pinch with thumb and three fingers

Show Desktop - Spread with thumb and three fingers