The meaning of these settings is as follows.
At the end of a backup, a file retention rollup process takes place where the client determines what old versions of files it may delete from its own local backup folder as well as the Onguard Remote Backup Service.
If retention is a number greater then zero then the backup date of every file contained in the backup vault(s) is checked such that any versions of files backed up more then retention days ago are deleted if there exists one or more versions of those same files which have been backed up more recently in the vault(s).
Next, if version is a number greater then zero then a search is done for any files in the backup vault(s) where there exists more then version numbers of those files, and the oldest versions of those files are then deleted until there exists no more then version of them in the backup vault(s).
Please also check out the “preservedeleted” INI setting, which can also be selected interactively on the Expert Settings tab.