Am I not supposed to be able to adjust the difficulty settings in this game? I went to the ini file and found there's a line for "difficulty" set to 1 which I'm assuming is normal. I went through and changed the numbers and saw the difficulty change on the save/load screen
2=hard
3=devil
4=hell

I'm just wondering, do I unlock the ability to adjust the difficulty setting later or is this an oversight on the game's part? I just beat the first boss of the third floor in the first dungeon.

Likely too late for OP, for other people wandering here...

Difficulty setting is one of options you CAN unlock. You first need to unlock diet decisions, then get it for for 30 policy points and greasing some palms with treasure. This allows switching to easy and hard (default is normal). Devil and hell will probably come later.