A couple of questions

I have a couple of questions regarding VBSEO

1. I heard somewhere that the site will loose all its indexed pages on search engines when it first applies the VBSEO because of change in URLs I guess, but one of your customers bamastang said that search engines have no way way of recognizing whether a site is using seoed urls or normal ones. So my question is why would site loose its pages?

http://www.mysite.com/forum/forumdisplay.php?f=1 will take me to a certain forum but after I apply VB SEO to it it would become
http://www.mysite.com/forum/1-cricket/

but wouldnt the first url still redirect to the second one?

Yes all the old showthread.php?t=466 will redirect to the new rewritten urls and all the old forumdisplay?f=1 will 301 redirect to the new urls automatically.

All your old dynamic links will be 301 redirected to the rewritten vbseo urls so that you don't loose traffic from those old links.