Why is my loyalty programme greyed out and refusing to switch on?

Because the settings as saved would collect stamps that could never turn into anything. Read the line next to the tick box. It names the exact reason: a free item reward with no item picked, a percentage reward with no percentage, per spend earning with no amount, or per item earning with nothing ticked. Fix what it lists and save, then tick it. Nothing you already saved is lost while you sort it out.