I'm playing a normal game, start new game, choose galaxy size and victory conditions, then go to customize race, then select number of opponents only then start game and all opponents are set to Team.The options are in there when you choose your opponents. I'm at work so I can't remember off the top of my head, but the setting you want is definitely on the screen where you choose your opponents.
that's what i said...look in the parenthesis from my previous post!
(where you select races to play against).
maybe i was just a little unclear because it was late, i was tired and i couldn't remember the exact name of the screen.