It does not allow you to enter an inactive item in PO in 4.5. It DOES let you enter it in BM however.
Here's what the help says:
Inactive Item
Select this check box to make the item inactive. If an item is inactive, it cannot be entered when adding a line in Sales Order Entry, Sales Order Invoice Data Entry, Purchase Order Entry, Receipt of Goods Entry, Receipt of Invoice Entry, and Material Requisition Issue Entry. An inactive item can be entered when adding a line in Return of Goods Entry and Inventory Management Transaction Entry only if the appropriate security is set up. Alternately, if Discontinued is selected at the Product Type field and the item is entered in a data entry task, a message dialog box appears stating that the item is discontinued and asking whether or not to continue. If you click Continue, the item is accepted.
Note If an active kit containing inactive components is exploded in one of the data entry tasks listed above, the components will be treated as active.