I have to disagree with one part of your "correct" answer set. You say that existing indexes can be used, and that cost me a point for this question.

Microsoft says quite clearly at http://msdn.microsoft.com/en-us/library/ms190356.aspx that "SQL Server will process SELECT statements on these tables or indexed views as if the indexes on computed columns or on the views do not exist" when ANSI_PADDING is OFF, which means existing indexes can *NOT* be used.