The option in the backup job Advanced tab "Limit the number of recovery points" , if set to "1" that means it will retain only one set.
Note : it is not 1 recovery point. If the schedule is set to weekly where Mon is full backup and rest of the days is incrementals , then it will backup the set of the week and after it creates the second weeks set , it will start deleting the recovery points.
So it will not be deleting the recovery points prior creating the next weeks recovery points. It will delete the sets after creating the second weeks recovery points.
Secondly , you have to enable the option "Automatically optimize backup"
Please check the article http://www.symantec.com/docs/HOWTO21386
Third , it also checks the disk threshold, so the threshold can be reduced according to your availability or it will try deleting the recovery points after the threshold is crossed.
Also if you are unable to delete the recovery points from the program, you do not have to delete them manully as it may then not reflect in the program once manually deleted.
I hope this helps !