A dsl/cable router works by having a WAN port that "routes" packets to the LAN side with the switch ports. (Even though the switch is integrated in the device, as far as network layout is concerned, the router has a single LAN port with an IP address which is plugged into a "port" on the switch. So you can imagine the switch as being a separate device.)
The switch acts as a switch no matter what the rest of the router is doing. If the computers plugged into the switch ports communicate with each other (or with another router or switch plugged into one of the switch ports), the traffic doesn't ever pass to the WAN port of the router, or even to the LAN "port" of the router since a switch only sends traffic to the port with the destination computer on it. The router could be configured to do anything at all with the traffic -- port forwarding, DMZ, routing, filtering -- and it would have no effect on the traffic on the switch.
You cannot use the WAN port to connect the router to your network to make it a "switch". The WAN port is a single Ethernet port used to bridge your network with another network (in this case, the DSL or cable network via the modem). If you want to make use of the 4 port switch, you can only use the 4 LAN ports. If you need to connect it to another router that is providing your Internet access, then either you need to plug one of the LAN ports into the uplink port of the other router, or you need to use a crossover cable to connect it to a regular port on the other router.