The problem:
Setting SELINUX to disabled in /etc/sysconfig/selinx does not work.   SELinux continues to run in Enforcing mode event after a reboot.
The cause:
/etc/sysconfig/selinx should be a symbolic link to /etc/selinux/config but it sometimes gets created as a file.  This means you can edit it to your heart’s content and it won’t change a thing.
The solution:
Option 1:
Edit both /etc/sysconfig/selinux and /etc/selinux/config.
Option 2:
Fix the issue by making /etc/sysconfig/selinux a symbolic link again.
 
 
Source: http://fogproject.org/forum/threads/selinux-wont-disable.10714/