The "versions" is a means to have backup files. If something gets corrupt, or you change your mind about the direction your going, you can recover a previous version. Its been part of Pro|E since a long time ago.
Windooze... doesn't like these type of extensions. I don't know how you can wholesale tie the lot to Creo... I suspect you can't. Besides, Creo likes to have a specific start up folder so you can open the right configuration file when Creo starts. Have you tried "drag and drop"? Works for me!
Oh, and there are two ways to avoid the "duplication":
1. configure the system to recognize the purge command in the DOS shell (YES, DOS!)
2. backup the file in a separate folder and all will begin with .1 again.