Hi I reproduced the behaviour on two separately hosted sites, with the 2013 theme and GF as the only active plugin, as follows:
1) Create a new form with any name/description
2) Add a "name" field from the Advanced fields
3) Check merge-tags dropdown in notifications - all OK
4) Change Name format to "Extended" - repeat step 3 - all OK
5) Make name field required - repeat step 3 - merge-tag dropdowns broken
6) Change Name format to Normal - repeat step 3 - still broken.
Can you reproduce this?