Are you trying to copy a segment of the script that includes the function definition and paste it into the Command Window, or right-clicking and selecting "Evaluate Selection"? That will not work, any more than pasting the code starting with the line that declares the function using thefunction keyword to the Command Window would. Fromthe Release Notes in release R2016b for this feature:
"Note: If your script contains local functions, you cannot run code sections (also known as code cells) individually. The Run Section and Run and Advance buttons are disabled. To run the script, type the saved script name in the Command Window or click Run. You can run sections individually in live scripts containing local functions. "