I follow the instructions using a single layer grayscale image and then go to filters >> decor >> and when I get to round corners, it is faded out and I am not able to select it.
Can anyone help me with this?
In trying to duplicate your problem using a grayscale image in *.jpg format I found that in order for rounded corners to display in Filters - Decor, I first had to remove the alpha channel (if there was one). It worked in either grayscale mode or rgb mode as long as it didn't have an alpha channel. That's my experience using GIMP 2.6.8 on Win 7 (64 bit).
From reading this post, it seems the opposite is true:
For me, it worked in either mode as long as I didn't have an alpha channel.