I hope the following information helps Clear up your questions.
## First Section ##
This is how disabling version control is expected to work. When an item is checked out the updates are stored in the version control tables of the database. If there is not a check in the main object tables are not updated. Therefore when you disable version control the information stored in the version control tables is deleted.
There will not be a way to recover the data lost. Even if you restored a back up of the project the automated tests wont be available. This is because not all of the automated tests are stored in the database the code is stored in the file repository. During a check-out the updates to the code are stored in the TD_80 directory for ALM/QC. The updates aren't uploaded to the ALM/QC file repository until check-in.
## Questions Based on the Posited Scenario ##
1 Will all the changes made to Requirements/ Tests will appear from beginning to last checked in?
> A) This depends on what fields have
> history turned on (some fields do not
> support history). All changes that
> have been made to the requirement/test
> will be saved. Meaning that when
> Version Control is turned off the
> requirement/test will look Identical
> to what was version 3.
2 What will be the value in Version field?
> A) There should no longer be a value
> in the version field. If there is I
> would assume it may say version 3 or
> 1. If version control is enabled again the version should revert to 1.
3 Does it delete only version history or entire history for each entity or only those entity which has been checked out and in?
> A) Only the version history should be
> deleted. The history of the changes
> (based on what fields the history is
> tracked in) should still be available.
4 Since it deletes all history, would I be able to figure out the changes made in different version created every time I checked in the entity?
> A) Disabling version control should
> only delete the versions, it should
> not delete the history which tracks
> changes to fields that have the
> history check box checked, in project
> customization. Again some fields
> cannot have their history tracked.