If you want to have Mp3 files from Mp3 CD’s in your library than you should uncheck this options. If you want to overwrite your Mp3 library you can search media again using Search media for Mp3’s with overwrite checkbox checked.
You can convert audio CD copies to MP3 format or WAV format using the CDDB. At the same time you can add ID3 tags and lyrics and photos to the MP3 file.
To format track numbers just select files that you wish to add leading zero at beginning of the track number. That is related only for track number that ere less then 10.