Nick,
Well I'm confused then because I don't have any sidecar files for my CR2 images and it because of this setting in the ACR preferences
in General> Save Image Settings in: Camera Raw Database
I'm trying to attach an image of it but I don't know if its going to work.
I don't know how that database works, but if you were ever to upload your RAW files or move your RAW files to a different machine then the settings would still be lost even if you never used Photo Mechanic. Unless they have some way of uniquely identifying the RAW files themselves then any movement (or renaming of the filename or parent directories) would also cause the settings to be lost. I'd suspect they use a checksum of either part of the file or the entire file for this tracking.
I'd also expect that because PM "unmodified" your file that the database checksum didn't match any longer and thus ACR couldn't find the matching settings, thus causing the "loss" of your adjustments. I put "loss" in quotes since the adjustment data is still likely in the database, it just no longer can be matched up with a corresponding file.
I don't think there is any solution but to go with sidecar files. PM has to put your edits somewhere and it doesn't have the facility to keep settings in a database. There are two choices: embedded or sidecar. Embedded will cause checksums to change and ACR won't be able to match up settings with files and cause the loss of the settings. XMP sidecar files will solve this issue, but you'll have to direct ACR to use them as well.
HTH,
-Kirk