Are those the steps for Android 5/Lollipop? I don't see any of those menus in settings.
edit: Ah it's in the actual hangouts app that you have to go to settings. Also if those settings are greyed out then you might not have Hangouts handling your SMS messages, so run the Messaging app instead and go to its settings to disable auto open of MMS.
Yeah that threw me for a loop too, I think it's because Hangouts isn't configured to handle SMS for you. Check the Messaging app and its settings. It has a similar disable auto retrieve MMS setting.
edit: Ah it's in the actual hangouts app that you have to go to settings. Also if those settings are greyed out then you might not have Hangouts handling your SMS messages, so run the Messaging app instead and go to its settings to disable auto open of MMS.