Using 3.0.3 and CB 3020 for 1.7.2r0.3, My players have mobs spawning directly around them when underground the groundheight (55). My underground min was set to 50 and the underground max was set to 80.
If you need anything else just let me know. For now I have set the ground height to y1. Once I did this the above-ground settings took over and work fine.