The commit option "Bypass commit hooks" should add the --no-verify flag to the commit as described in the SourceTree 1.5.7 release notes. I've tested this functionality on Windows 7 and Windows 8 systems using SourceTree 1.6.3 with Git 1.9.2 (not the embedded version). The option has no effect on the commit arguments, and pre-commit hooks will execute regardless of this setting.

To reproduce, create a pre-commit hook at .git\hooks\pre-commit with the following content,

#!/bin/bash
echo "pre-commit hook failing commit"
exit 1

Then, attempt to commit a file in SourceTree. After the commit fails due to the hook, select "Bypass commit hooks" in the "Commit options..." pull down. The commit will still fail due to the hook. (From the command line, git commit -m test --no-verify should succeed and does in my testing.)

I used Process Monitor to confirm that the setting makes no difference in the git commit arguments. With or without the setting, I get a git commit similar to this,

"C:\Program Files (x86)\Git\bin\git.exe" --no-pager -c color.branch=false -c color.diff=false -c color.status=false -c diff.mnemonicprefix=false -c core.quotepath=false commit -q -F C:\TEMP\i53wbuxi.hvt

(Although a separate issue, it would also be nice if "Show Full Output" would also show the git command it's issuing.)

Thanks for the help and the great product!