We are running Navision 4.0 and want to upgrade our AD Functional Level to 2012.
Will the upgrade to AD Functional Level 2012 have any affect to Navision?
It shouldn't and I've never seen functional forest change caused any issues in my experience. It might require for NAV to be synchronized.
Upgrading your AD level will not have any effect on NAV.
When Windows authentication is on, NAV just asks the operating system (your version of Windows desktop) "Please authenticate me." It is up to your local version of Windows to deal with authenticating with Active Directory, not NAV. You might run into problems if you have an ancient version of Windows Desktop and a 2012 level of AD, but NAV won't be the cause of the problem.
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