The game loads from whichever folder is named "The Sims 3." I give very cryptic yet distinctive names to each of my folders and rename them as needed.
Overwatch should be removed from the Mods folder before beginning a challenge, and I think that's the only way to truly "turn it off." It won't be there in a clean factory reset, but if that's the only thing you need to remove, it shouldn't be too hard to move it to, say, the desktop without needing a reset.