No, with it disabled, it is as though it doesn't exist, but you will likely need the backplane driver:
Server 2012 is not officially supported on the 1850, but if it is like the 2850, it will run it (non-R2) fine - you'll just need to use the 2008 R2 drivers.
Download and run it to extract the contents, then put the contents on a flash drive. When/if Windows gets to the point that it can't find any hard drives, click on the Load Drivers link and browse to the driver files on the flash drive.
So, I have a couple of question(s).
1. You are probably better off using 2008, as it is fully supported on this server.
2. Up to you. You can try disabling RAID, but there is no guarantee it will install any better than in RAID mode. In SCSI mode, you give up the performance benefits of RAID. Updating firmware may be required in either case.
3. If you set it to OFF, that turns off the entire SCSI subsystem. SCSI Enabled turns on the SCSI subsystem. RAID Enabled overlays RAID functionality over the existing SCSI subsystem.
I have fixed this by changing the BIOS raid setting to SCSI Enabled, I am now assuming there is something wrong with my RAID controller, I will look into it.