I believe that coder_52's question was about changing Contractors into Vendors, not vice versa. (I'm not sure why, though, since the user wishes to issue 1099-NECs. It seems to me that Contractor would be the appropriate type for that. However, my understanding of the distinction in QBO may be inaccurate, as I have only ever used QB Desktop, which doesn't use a Contractors designation for distinguishing them from other Vendors.)

Can one reverse the penultimate step of your instructions work to yield the opposite effect? That is, could a payee be removed from the Contractors list, but retained as a regular non-1099 Vendor, by simply unchecking Track payments for 1099 in their Vendor Information?