One the block diagram is gone, it is gone forever.
I actually really dislike this method of protecting VIs. A VI without a block diagram cannot be loaded into a newer version of LabVIEW because the diagram must be there for the VI to be re-compiled. I have bought third party toolkits in the past that were absolutley worthless when I upgraded my version of LabVIEW. Having the VI's block diagram password protected is probably just as secure and while that doesn't guarantee that they will work in a newer version, at least there is a chance.
