You don't need to use Modifyworld if you're using PEX. We use PEX just fine without Modifyworld. What other plugins are you running? If MW is gone and you still can't build, it's got to be another plugin.
If you disable the plugin and restart they'll be able to build. I agree with the previous poster who said Worldguard can blacklist anything you wanted blacklisted with Modifyworld.
