TL;DR
I simply installed Service pack 2 (SP2) patch of SQL Server 2008 R2 and everything started working for me.
Read on if you want to know more. Configuration wise my box was all correct and the file stream feature should have been working on my default instance of SQL Server 2008 R2. Here are my box details:
Operating System: Windows 7 Ultitmate SP1 (64 Bit)
SQL Server Version: SQL Server 2008 R2 SP1
On SQL Server if I run this query select @@version
it was returning following details:
Microsoft SQL Server 2008 R2 (RTM) - 10.50.1600.1 (X64) Apr 2 2010 15:48:46 Copyright (c) Microsoft Corporation Developer Edition (64-bit) on Windows NT 6.1 <X64> (Build 7601: Service Pack 1)
Whenever I opened SQL Server 2008 Configuration manager I will face this issue. Luckily I also had SQL Server 2014 installed on my machine. So I tried enabling File Stream feature from configuration manager GUI of SQL Server 2014 but it started giving error mentioned in current post.
I simply installed Service pack 2 (SP2) patch of SQL Server 2008 R2 and everything started working for me. SQL Server Configuration manager for 2008 R2 also works fine and I'm able to enable File Stream feature also without any trouble. SQL Server 2008 R2 SP2 can be downloaded from here.