"Selected file is not an Anchored file and cannot be restored" Notification
Files must be Anchored before you can use the "restore to a previous version" feature shown below.
If the file is not Anchored you will see the Notification shown below.
Anchor the file and you will now have the ability to "restore to a previous version" once changes have been made to the file. If no changes are made to the file there is nothing to restore.
How to Anchor a file.
Right-click>Anchor>Anchor My Data>Anchor My Files.