The error message just means that the file was encrypted with version 2, not version 1. Version 1 is smart enough to realize this, but it cannot do more. The formats of the files produced are different, and while Version 2 supports Version 1 (i.e. it is backwards compatible), Version 1 cannot support version 2 and that’s what the message means.
As for the modification time stamp, version 2 does not support keeping the original date time stamp, since it was originally a bad idea and it breaks the promise that the time stamp provides. The encrypted file *is* a different file than the original, even if it contains the original. Thus, when you decrypt the file, the name *and* the original time stamp is restored. But the encrypted file is a different file, and should have a new time stamp. Most backup strategies will also fail if this is not done, since it may think the file was backed up, while in fact it was not (just the original plaintext).
To revert the files encrypted with Version 2, download the standalone version of AxCrypt 2, and decrypt them with that.