What does this setting do?
"Keep existing AFL file when opening project"
What I want is the Analysis Window to always look for the most recent .afl from the disk. I do NOT want to store the .afl in the analysis project.
Is this the right setting to do this? Should I have it checked?
Yes that is correct setting for what you want (i.e. use recent AFL file from disk, if it is present).
Which XML Node attributes for this setting in .APX?
Otherwise, is there a way to specify this externally before running the APX for Backtest using .JS?
This is global application setting (Preferences), not per-project, as having it per-project makes no sense (you would need to re-open every project ever saved and change the setting and re-save it).
Instead you just set it ONCE and it works for all projects without worry.
This setting does NOT mean that formula is not saved in .APX file. It IS saved, but it is NOT loaded from .APX when more up-to-date version of the .AFL formula already exists on your disk.
Thank you for your reply! Makes sense.....