I started having issues with dynamic highlight turning itself off a few days ago in a large assembly. I found the checkbox under tools > options > display, checked the box, problem solved. The problem reoccurred the next day only the checkbox was grayed out. I eventually restarted my computer and was able to check the box again. Today the box was grayed out again. I restarted my computer but the box was still grayed out. I was using 2016. The company gave us 2017 to install early last week. So, I figured now's the time. I have installed 2017 but the box is still grayed out.
Someone else suggested using a selection filter in lieu of dynamic highlighting. That just seems like a workaround and seems like it would slow my work.