Sorry for the late reply, I starred this in my inbox a while back knowing it is a thorny problem that I would need to look into before answering.
There is no version history kept for drafts. The version history is created based on the previous live version being saved to history just before publishing the draft so it would show the last mod by user of the content before it was changed
Admittedly not a lot of thought about workflow was made when we added the settings to show created by and last modified by and that really opens a can of worms in terms of complexity. I'm open to change vs how it currently works but its kind of a diffcult thing to decide how it should work and I don't want to add a lot of complexity trying to achieve some "perfect" solution. Maybe those settings should only be used when not using workflow.
Currently the last modified by would be the person who published and the created by would be the person who created the draft. If someone else updates the draft before it gets published do you think that person should be promoted to the created by? Or do you think the last draft editor should be the modified by instead of the person who published it, ie treat publishing as not the last modification? I could probably go along with that using the last mod user of the draft as the last mod user instead of the person who publishes.
But then what should happen on subsequent rounds of draft editing. Should the new draft creator be promoted to created by or just last modified by. Then what if the draft is edited again by a different user before publishing, last one wins? The logic and decisions start to get unwieldy and we have no way of knowing if a draft entails minor changes or a complete rewrite. I think we should always consider it as an update and maybe never change the created by? If its a new article it should probably be done by creating a new instance. It gets to a point where you may be better off not showing those settings and just listing the author who you would like right in the content since whatever I decide the rules should be may not be what you want.
So I'm open to a suggestion of how it should work but I'd like the rules to be simple whatever they are or I'll regret ever adding those settings to show created by and last mod by.
Regarding the editor prompt, that will happen if anything is changed in the editor. I've noticed that in at least one of the editors going into html source view seems to change it even if you make no changes while in there, the editor does some re-formatting of the html so it fires the content changed event of the editor and the prompt happens if you try to leave the page. There isn't really anything I can do about that except maybe complain upstream to the editor developers but I doubt that will do any good.