Re: I see two versions in Approved state ;need inputs below is an explanation of the scenario
this is the OOTB behaviour of Windchill.
Is this acceptable? - yes, it is since Windchill works with config specs or filters.
In most scenarios the user sees only LATEST or LATEST Release/Approved. This filters displays dynamically the correct revision for you to access. And on the history tab you see clearly that this revision was approved and now there is a successor.
BUT there are chances that somebody gets a wrong impression and does mistakes.
1. search with preference to show all revisions -> this can lead to the case that the user picks a wrong one but sees state approved/released.
2. accessing an old revision via a baseline or just by a describe link which is version specific.
Overall I would say you should train you users to take first a look at the upper left corner of the retrieved object. If you see a blue link "Latest" then this might be outdated!!
A practice several customers use is to set the old revisions to obsolete as soon the latest gets to the released state.
This is a rather simple customization of introducing a setState event listener. Unfortunately we do not have this OOTB configurable but it would be worth to introduce this as an idea. I am quite sure there should be already some around.