Issue with Finder on iMac running OS X 10.10.5 "Yosemite"
From this Apple Support article it's clear that the Finder Preferences are overridden by the preference in
System Preferences > Dock > Prefer tabs when opening documents.

This seems oddly clunky to me. Apple's GUIs are usually thought out very carefully, but they seem to have made a mess of this. (Well, unless I'm missing something.)