Which ROM are you using? If you are using a rom that uses Nu11u5 rooted 1.6 kernel, that could be the problem. I use BH_Man's Take 5 rom and Root Explorer works great. But, to answer your question, no there is no setting that needs to be enabled for root explorer to work and your phone doesn't need to be plugged into your computer. The only option that should be enabled is USB debugging, although it shouldn't affect root explorer.