This may sound weird, but check in "assign roles" that the students are actually assigned to the role of student. This very same problem happened to me once and for some reason the students weren't assigned the proper role. Make sure that they are!
The students seem to have the proper roles....
In reply to Kent Villard
Ang: Re: Ang: Teacher can't see Journal entries of students
by Kasper Lauest -
Have you checked in the course settings to see if anything appears "strange"?