Indeed, it's a known design consideration that you can't change settings when it's armed. That has caused me minor heartburn in the past too.
I verified that you can still Erase Settings when it is set to Always Armed (and actually armed; you need a valid input set up for instance for it to actually arm when set to Always Armed) (you have to use Rescue in this case), so this isn't the cause of the original issue of "CC3D can't Erase Settings and CC3D mixer error when running setup (caused by can't Erase Settings)"
Under some very untypical conditions, the CC3D settings memory gets full and the only way to make changes is to first erase the current settings. I have tried to fill CC3D settings memory and have not been successful.