Don't take this as gospel, but "Don't Havok settle" appears to be primarily used for http://www.creationkit.com/Run_Havok_Sim in the CK.
The CK tutorial has this to say ...
Unlike previous Bethesda toolsets, physics-enabled objects in the Creation Engine will automatically settle when they are loaded in-game. Objects marked with "Don't Havok Settle", shown in Fig 3.16, will skip their initial settle, but still simulate when affected by some impulse in-game. For example, a bucket in mid-air with this box checked will still be floating in that position when you load the game. Once hit by some other physics entity, however - such as an arrow, spell or the player - it will behave just like any other object.
I'm guessing that interaction with the collision mesh of another object of some kind would be considered an "impulse".
It also has this to say ...
For advanced users who wish to disable the physics simulation of an object entirely, there is an included http://www.creationkit.com/Category:Papyrus script called http://www.creationkit.com/SetMotionType_-_ObjectReference which can be attached specifically for this purpose, although its use is not necessary for this tutorial.
SetMotionType( Motion_Keyframed ) does appear to prevent things moving, even when the player bumps into them. However, this is likely not desirable except in specific instances (but can obviously be modified by a script on-the-run).
In my case, I learnt from the experience and modified my cell layouts to account for it. A reply from the Bethesda Gods regarding this would be nice.