There is a bug in the new version 1.2.1.1 that prevents the block reward system to switch to the new algorithm "reward = 1/diff". This is NOT fatal, everything works fine! tf2honeybadger and I investigated and found the cause of it. This will not cause any forks or other issues, it just delays the switching.

Please stay tuned for sawedoff's or tf2honeybadger's statement, they might consider making an update of the client.