Does this code really disables vtec, and how? Does this code need to be cleared for vtec to kick in?

 

yes,

code 17 is vehicle speed sensor

it works from a cable going from the back of your guage to the sensor in the gearbox.

make sure it hasnt poped off.
if your geting that your kms shouldnt be working or your rev guage

 

It was the speedo cable that snapped in half some how,