The Auto Adjust Quotes item in the Quotes submenu of the Convert menu is a toggle that you can turn on and off. You can toggle it on or off by default using the “adjust quotes” checkbox in the on the Editor page in the file type configuration.
When on EditPad automatically adjusts straight and smart quotes in any text you enter when you move the cursor away from the line you entered the text on. This delay ensures that EditPad Pro can correctly distinguish between single quotes and apostrophes. It also ensures that the syntax coloring scheme can match up opening and closing quotes when the line is complete before any conversion is done as that may affect whether those quotes should be converted or not.
If your file uses a syntax coloring scheme that has rules for adjusting quotes then the conversion done by Auto Adjust Quotes is exactly the same as that done by Convert|Quotes|Adjust Quotes. It is explained in detail in that topic. The toolbar icon for Auto Adjust Quotes reflects this by showing a golden straight and a golden smart quote with a bidirectional arrow in between like the Adjust Quotes icon, but with an added pencil to indicate automatic editing.
If your file does not use a syntax coloring scheme or it does not have any rules for adjusting quotes then Auto Adjust Quotes converts straight quotes that you enter into smart quotes in the same way as Convert|Quotes|Straight ⇒ Smart Quotes. The toolbar icon for Auto Adjust Quotes reflects this by showing a red straight and a green smart quote with a unidirectional arrow in between like the Straight ⇒ Smart Quotes icon, but with an added pencil to indicate automatic editing.
You can use the Convert|Quotes|Adjust Quotes or Convert|Quotes|Straight ⇒ Smart Quotes command to apply this conversion to text that is already present in the file or to text that you have pasted. These two commands are available regardless of whether Auto Adjust Quotes is on or off.
Convert menu
Convert|Quotes|Adjust Quotes
Convert|Quotes|Straight ⇒ Smart Quotes
File Types|Editor
File Types|Colors and Syntax