I am not sure if this is a bug, miss configuration or wrong perception of how this is supposed to work. When @mentions is used, it create a text ~ name without a hyperlink. Was this supposed to be @name with a hyperlink?
Yes, @mentions should generate a hyperlink. There are some bugs related to @mentions as noted in this previous answer.
The global browse user permisson must be granted in order for @mentions to work at all which could also be your issue.
The more serious issues with @mentions I believe are fixed or at least improved with release 5.0.6.
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