When the "Use default Email" checkbox is selected, the "To" and "CC" fields will use the values set by "Set default Email". The user must set valid email address for "To" and "CC" fields in the "Set Default Email" option before selecting the "Use default Email" checkbox. If this has not been done previously and the dialog was saved without an email address, then the "To" and "CC" fields will be null and it will not allow the null addresses to be entered into the panel and Set when the "Use default Email" checkbox is selected.
After the "To" and "CC" fields" is set in the "Set default Email" dialog under the "All Alarms" alarm setting, like below:

Then when the checkbox "Use default Email" is selected, the dialog "Message Settings" can be saved successfully.
NOTE: Previous entries in the "Set Default Email" field can be removed by clearing the Default Email Settings registry variables
- DB2_DefaultEmailSettings for DB2
- DBO_DefaultEmailSettings for Oracle
- DBSS_DefaultEmailSettings for SQL Server
- SQL_Azure_DefaultEmailSettings for SQL Azure
- SSAS_DefaultEmailSettings for SQL Server Analysis Services (SSAS)
- SSIS_DefaultEmailSettings for SQL Server Integration Services (SSIS)
- SSRS_DefaultEmailSettings for SQL Server Reporting Services (SSRS)
To clear the value
- Navigate to Administration | Rules & Notifications | Manage Registry Variables
- Search for the registry variable
- Click the variable name
- Click View and Edit Details in the popup
- Click the Remove button

Alternatively, users could also manually edit and add default email addresses using the Change button in the format as shown above.