I just created a SP world with the M.E. Classic setting to see for myself. Terrain and structure generation are as expected, unchanged compared to the standard way the mod generates the land. However, as the default minecraft biome generator creates relatively very small patches of biomes in the world, chances are quite high you won't find any structure in an average patch of a biome. As settlements require large pieces of land meeting the needs of the settlement generator to be able to generate a decently looking settlement, in most of the small biome patches no settlement will be generated. Too bad.
You can try to use a mod like ClimateControl to make the world generator create larger biome patches, or use the 'create large biomes' setting of vanilla minecraft for the same purpose. I never tried so I don't know if these options would work. I'd expect the large biome setting of minecraft to be effective though.
Edit: Hm ... too bad again. The large biomes generation of vanilla minecraft does not combine with the M.E. Classic generation.