This is my first external flash and I'm not sure if I'm missing anything simple. The flash works in slave mode outside of the camera. But when I mount it in the hotshoe mount I can't get it to fire. The flash is set to M (Master) mode. When I try to change the settings in the menu there is a message about the flash being incompatible or not being on. The menu item is called "External flash func. setting" and the message says "This menu cannot be displayed. Incompatible flash or flash's power is turned off."
I was having the exact same problem but wasn't able to get it working, even after doing a ton of research. I think I have your solution if you're having the same problem that I did; the flash will not fire if you have the LCD screen active, the pulse is not emitted to the flash to trigger it unless it is being viewed through the viewfinder.
Hope that helps!
For camera menu control, you need to have a flash that has that feature in it. All of the flashes with that feature have all five of the pins on the foot to correspond to Canon's five hotshoe contacts so that the flash can electronically communicate with the camera (however, five pins is no guarantee of menu-command capability--e.g., even Canon's own 580EX cannot do it). A single-pin manual-only flash simply can't communicate anything other than the sync/fire signal, because it only has the one pin. That's why they're so inexpensive--they're much simpler.
However, it should fire correctly, so long as you're not attempting to do anything other than simple manual flash from the camera (i.e., it can't do TTL, HSS, 2nd curtain sync, camera menu control, OEM wireless slave mode, etc. etc. etc.) Check that the flash is correctly seated on the hotshoe, and that the batteries in it are all full charged and in good health. Make sure that the flash is out of any slave modes; putting the flash in a slave mode tells it to listen to the slave sensor, not the flash hotshoe.
The real reason has nothing to do with the LCD/LiveView, that'd be stupid, wouldn't it?
The reason is Silent Pictures.
Turn it off in the Canon menu (change to "Disable") and it will work in LiveView too.
The reason for it not working in silent mode is that the camera can't do a pre-flash as it would in normal mode, since the mirror is usually down during that. In LiveView however, the mirror is up by default when silent mode is enabled. With silent mode disabled, the mirror drops for the pre-flash (audibly) and rises up again immediately after to take the picture.
Personally, I don't know what the advantage of silent picture is and I don't need it, so disabling it was okay for me and now I can use my external flash in LiveView too.
I have found a solution to the same problem but with Canon 600D + YN560 III Turn off the LCD screen and take photos through viewfinder only. The flash will not fire in live mode.