Basically the CONFIG settings allows you to force the WDT either on/off OR allow the program to turn it on/off at runtime.

As for resetting/clearing it, as long as you don't DEFINE NO_CLRWDT 1 PBP will clear/reset the WDT by inserting CLRWDT instructions into the code - it doesn't matter if the WDT is actually enabled, disabled, running or not. The instructions will be embedded in the assembly listing of the program. Unless, apparently, you do this kind of super tight loop.