Did you happen to move the game to another directory without de-installing and re-installing the game? That could cause it.
Are you running any anti-virus or anti-spyware programs? Those can cause it.
Did you copy the *.jsm file(s) from a CD? If so, by default they will be marked read-only. Just check the properties of the file and uncheck the 'read-only' flag.
If you installed the game as a different user than the one you are running as, you will not be able to save any files, including head positions, as well as the login information, or joystick settings.
Basically, if you are selecting an axis to modify in the "Map Contollers" panel, making adjustments and they are not saving, then it is due to the files or folders being marked read-only, or something is blocking the game's ability to write files.
If you can sabe head positions in a plane and they stick each time you start the game, then the "settings" folder is fine.
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If everything is being saved, but the damping setting, then I have no clue. I would completely remove the game (use Add/Remove Programs in the Windows Control Panel), then navigate to the Aces High II installation folder (default location C:\Program Files\HTC) and remove all the folders, including the HTC folder.
Re-install the game and do not copy anything from your previous installation. Try it and see if it works. Make sure to disable any anti-virus programs or anti-spyware programs during this entire operation.