Homebrew PCBs

I use the same setup that you have been trying, however I don't recall the printer settings. When I fist started out with this setup I also had problems with the toner not sticking to the board. What I found was that after I steelwooled the board it needed to be cleaned with a lint free paper towel using acetone, until you don't see any transfer on the paper towel. 
Hope this works for you - I know I was getting pretty frustrated before I found this, since then I haven't had any problems with toner lifting.
One other thing, make sure you are letting the paper soak in the water long enough. Usually it will float off the board on its own. Or I wait about 5 minutes, just to make sure.
Good luck.