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Configuration variable MS_DWGSAVEAPPLICATIONDATA= 1 does not seem to work for MicroStation V8 XM Edition.
This is related with another configuration variable MS_DWG_LEVELDISP_FOR_VPORTFREEZE.
In MicroStation V8 XM Edition you can workaround it by setting MS_DWG_LEVELDISP_FOR_VPORTFREEZE=OFF, only IF the user does not need the setting for MS_DWG_LEVELDISP_FOR_VPORTFREEZE.Otherwise, it is suggested to upgrade to a newer version of MicroStation where this bug has been fixed.