Hi,
You did the configuration correctly so the 1 payment option should be selected automatically. Just like how it is with the shipping method.
Then i did the same thing in my local machine for testing, weirdly the result was the same. Then i was curious and test it with the original Virtuemart, and guess what?... the result was the same. The 1 single payment method never gets selected automatically. (in my case it was PayPal method without any country restriction)
You can test it by yourself in your website by disabling CleanMart temporarily with renaming this folder:
/templates/YOUR_TEMPLATE/html/com_virtuemart/
to
/templates/YOUR_TEMPLATE/html/com_virtuemart2/
To see if the same situation happens in original Virtuemart without template overriding (CleanMart works based on template overriding).
I don't know if it is a bug or VM developers have decided to eliminate the "automatic payment selection" because it might be against the law in some countries (i don't know if this is the case but some countries are very weird laws for eCommerce websites. this might be the reason.)
People have already been complaining about it on these topics:
forum.virtuemart.net/index.php?topic=96417.0
forum.virtuemart.net/index.php?topic=116066.0
Unfortunately there is not much thing to do in terms of template overriding, because choosing the method and processing the payment calculations are all handled by the VM Core files. Templates show what Virtuemart Core provides.
My suggestion to you to get always the latest VM version. For instance, from your screenshot, i am seeing you are using VM2.0.22c which is a very old version. (but having the latest version also won't solve this current auto selection problem though, because i tested it with the latest VM version in my local machine)
Regards,
Support