I have Discard Old Builds configured with the following settings, all other lines left blank:
Max # of builds to keep: 10
Status to discard: Success, NotBuilt

Older builds that are marked "Keep this build forever" are discarded in the same way as any other build. I assume this is unintentional. If it is intended (and I think that would be a wreckless design flaw), then it should at least be clearly documented.