I sometimes need to hide blocks from students and have never had a problem overriding roles/permissions until the latest version of 1.9.2+. When logged in as admin, and you get to the stage where you should be able to set permissions and say hide from students you don't get any choices but a messages that says "no capabilities available in this context". I may be missing something simply, but I've never touched "roles" in either install except in the manner I've described. Two screenshots attached.