Changing the setting will manage future Orders and mark Products as Out of Stock (products_status = 0) when Product Quantity (products_quantity) <= 0 ...

However, changing the setting does not change the existing Products where products_quantity <= 0 to be products_status = 0 ...

You can update your database products table by:

1 Backup your database

2 run the following in the Tools ... Install SQL Patches:
Code:
UPDATE products SET products_status = 0 WHERE products_quantity <= 0;