I had exactly the same issues on IB flights purchased with Avios LHR-MAD-GIG and GRU-MAD-LHR. Purchased in January for December this year, neither going through MMB in the BA website and using the five digit IB code on the IB website worked initially. As BA6501 says, after a couple of months, I was able to select seats, via the IB website. No charge for me - I'm Gold, don't know if that is relevant.