What that setting does is that when an order is made and the products_quantity falls to <= 0 the products_status is set to 0 which makes the Product be "Out of Stock" meaning not show in the Catalog ...
Changing that setting only affects Products based on future Orders ... it does not change the current setting for the products_status on Products where products_quantity <= 0 ...
You can do this manually or you could run this SQL in the Tools ... Install SQL Patches ...
Code:
UPDATE products SET products_status = 0 WHERE products_quantity <= 0;
NOTE: make a backup of your database before running commands like this ...
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