You have the Audio Mode set to "Specified output format only when necessary". When you are syncing to a hard disk folder the default file types supported setting is set to "*", so FLAC files are supported and there is no need to convert. So MC doesn't convert to MP3s.
Either change the "Files, Paths, & More > Support Types" to just MP3s, or change the "Conversion > Audio > Mode" to "Specified output format".