What extension is allowed on private messages?

Whenever I try to upload attachment to private messages, it says the extension is not allowed. I tried to change the extension but whatever I put it says is not allowed. If they are not supposed to have attachment for private message, you should remove the upload attachment form on private messages.

Also, how do I mark a private message as unread?

Edit: Sorry, attached the wrong thing. Yes, it seems that there's either a bug in PM attachments or a setting we've overlooked. I'll look into it.

Figured it out -- yes, it was a misconfiguration in the phpBB software (not a bug). Should be fixed now (I did test it).

For the other moderators, the explanation given by JimA here is what did the trick.