Your settings are correct. I will try to explain it in simple terms.
System protection is a procedure where the operating system makes a point to which it can restore in case of certain types of error. This is called a restore point and it will allow you to restore certain windows files back to this point without affecting your documents. Normally Windows will automatically make a restore point before installing upgrades or if you install new programs.
If you make a change or install a bad program you can click on the System Restore button in your picture above and restore your operating system back to just before this. It is not 100% reliable but is worth having the option.
Push botton reset is nothing at all to do with it. This drive contains a backup to allow you to reset your system to your original delivered state (either with or without your documents) and you certainly don't want it to change. You use this in catastrophique failure (when you don't know what else to do) or if you want to sell your computer.
Leave it off. It will not damage your drive if you leave it on but to make sure a future refresh or reset works do as ACER says and leave it turned off.