I've tested the code here, and it works fine. What you can do is: paste the code in an empty text file (like notepad) and save it as Mute.txt in your mIRC folder. Then, open mIRC and type /load -rs Mute.txt.
This will load the code in a new page, which assures that no other script interferes with the /mute. Click Ok and test it, with /mute <nickname>
I can't see any other reason for it not working. Are you using mIRC version 6.16? That might influence, although I don't think it's that...
Good luck,
Zyzzyx.
