You need to be within a certain distance of the tanker before the menu becomes active... I think it is 10-15 nm but I don't remember offhand.
You can request ALPHA CHECKS to tanker from AWACS, or, in the mission builder assing a TACAN to the Tanker so you can gauge the distance to test when the menu item becomes active.
Also, make sure you have the S-3 loadout as AERIAL REFUELER in addition to giving it a Tanker Pattern.