Hello Arthur,
I think I need more details...
Save on Application deactivate saves current document or all modified documents when you switch applications: for example from HippoEDIT window to Internet Explorer window.
Auto-Save every just saves all modified documents by timer. Can work together with Application deactivate (this options are not exclusive).
Both Auto-Save every and Application deactivate save document to same file (with same file name) and document loses modified flag.
In addition to described functionality, HippoEDIT saves auto recovery information every minute (configurable) in some temp file near original which contains document contents with its last modification. If HE crashes, it restores this last unsaved state and set document to modified. That is why it ask for save on close. There is also warning message shown in status bar informing about this.
So, once more:
what is wrong in your case?
Best regards,
Alex.