It appears if you have CONVERSATION VIEW turned OFF then send & archive will NOT work. Turning the CONVERSATION VIEW to the ON position will once again allow the current Gmail Labs feature-Send & Archive to work.
The problem: When Conversation View is OFF and you attempt to use Send & Archive, it will send but not archive. In a way I guess this kind of makes sense (since it is currently a lab feature and not completely bug proof), when you have conversation view OFF, this means you do not want each email thread to be joined in to one long message, thus causing the send & archive to not function, whereas turning the Conversation View on means you DO want each message thread to be joined in to one message, which would make the send & archive make sense, since you have completed the message and want to archive the item. Since the next time this message is re-activated, in the case there is further responses to the message, it basically calls up the message from the "all mail" (archive folder) of gmail. Having the CONVERSATION VIEW turned to the OFF position means you want each message as an individual message, thus making the Send & Archive feature unavailable. It should be corrected however, before this feature leaves the gmail labs I should think.
So for now, you have to make the choice of either having your conversations to be threaded together (conversation view ON) and NOT be able to use Send & Archive, or have your messages in one thread, allowing the Send & Archive feature to work.
Personally I like the conversation threading anyway so I'll leave things as is. The problem with conversation threading only affects those that send me a new message by simply going to an old message and replying from it, causing this new message to have the old message subject which can be quite frustrating since the new message may have nothing to do with the subject header. You are more likely to have this problem when those using email clients like Outlook are too lazy to click NEW MESSAGE and simply go to an older message that is most likely still in their inbox. Are you one of these people?