Hi GN
Yes, I had that problem back then and solved it in the same way as you. It was Capture One support who asked me to turn it back on as I am unable to export to a new Catalogue without losing all the metadata. Furthermore, for some reason even after switching xmp back on the catalogue didn't go into self-destruct mode for more than a week.
So yes, I can restore the backup, but that leaves me unable to export from a corrupt catalogue. Will wait to see what support proposes next.