For me, the 'correct camera distortion' works without any problem, even in greyscale mode, in 16 bits mode and with a normal background.
Could you try converting to 8 bits RGB mode and see if that helps ?
I converted to RGB and I was then able to get the filter to work.
Too bad that Adobe decided not to include requirements in the help file for this filter. I have made a comment in the help file and hopefully they will update the help file to reflect this requirement.