i currently have med 6.884 installed.(tho, i never had that issue with older versions)

-create a cube
-go to bone mode
-create 2 hinges
-go to apply verts mode
-select a hinge, select verts
-click on the apply button
-works for me.

even if verts are not selected, button is active.

you may try assigning a shortcut key to apply vertices.

go med->file->preferences->keyboard the first one is aply vertices(BONES:Add vertices)

Be sure that the model is MDL7.