Apparently, enabling this setting closes the main activity of the android application even if it is still needed. To prevent this from happening, you need to change the initialization of the new window a bit.
In Titanium Android, when creating a window, setting the property navBarHidden to true will often create a new activity like the code below:
1: var newWin = Ti.UI.createWindow({
2: navBarHidden : true,
3: backgroundColor : 'red',
4: top : 0,
5: left : 0,
6: right : 0,
7: bottom : 0
8: });
To prevent a new activity from being called, just use the property modal and set it to true like the code below:
1: var newWin = Ti.UI.createWindow({
2: navBarHidden : true,
3: backgroundColor : 'blue',
4: top : 0,
5: left : 0,
6: right : 0,
7: bottom : 0,
8: modal : true
9: });
The full source code for the demo can be see here