I've figured out what the issue is. Remember that we use the Pro version on our site, which means there are several extra features.
Having added a favourite to the test account you sent me, the Tab 'Favourites' displayed that forum. The option in the drop down takes you to the list of favourites in the User CP where you can add or remove the favourite forums you want.
Whichever you do, the end result is the same that forums stored as Favourites for a user are displayed under the Favourites AJAX powered Tab on the forum home page.
Does that make more sense? Were you expecting something else?
PS, neat colours for your site... reminds me of my site...
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