No aircraft is "automatically" and advanced ultralight. The decision of whether to register a UL kit as advance or basic is made at the time of the kit assembly by the original (or first) owner. If advanced - then you need to get a signed statement of conformity form from the manufacturer (or their authorized representative) after the kit is completed. This typically involves some form of inspection process. Once in hand, the SOC means the kit company has confirmed to Transport Canada that the airplane was assembled according to their type certificate with no unapproved modificaitons. It also means that the kit company is officially the "manufacturer" of the airplane, and assumes whatever potential liability issues this may entail. An AULA can voluntarily be downgraded to BASIC if you decide you don't want to continue as AULA, or it can automatically be downgraded if you make modificaitons to the plane.
If the decision is made to just go basic - then you just build the kit anyway you want and fly whenever you think it's ready for the air. You are the official manufacturer of the plane and assume whatever potential liability this may entail (if there was an accident involving personal injury or if the plane was ultimately sold to someone else). Once registered as a basic UL, that is pretty much permanent.
It is technically possible to re-register a basic UL to advance, but you would have to work with the orginal aircraft manufacturer (or their authorized representative) on this. You would need to convince the original manufacturer to give you a signed Statement of Conformity for the airplane. If they do - and IF THE PLANE IS LISTED ON TC's official register of approved AULAs - then it is possible.
Are there disadvantages of basic vs aula? That depends. Many would argue that basic has more advantages because it is much simpler with much less red tape. Plus you can make whatever modifcations or repairs as you see fit. The primary disadvantage of Basics I guess is that Basic UL's cannot carry passengers (except for flight instruction and if you are an instructor). There are also some airspace limitations, but if you have a functioning two-way radio, then not really.
The main advantage of AULA is that you can take passengers, fly pretty much anywhere (if appropriately equipped), and you are not listed anywhere as the planes manufacturer (some liability protection). However, you cannot make ANY modification to the airplane, nor substantial repair without the permission of the manufacturer and the use of their approved replacement parts. So - with an AULA you have a life-long relationship with the original kit company. And you hope they stay in business
So - the Challenger you are looking at was most likely originally assembled as BASIC, and therefore you can expect it to stay that way. I think it would be tough to convince the kit manufacturer to provide a SOC for one of their planes that was build as Basic. You would probably have to remove most of the fabric so the assembly could be examined and inspected, change any modifications that might have been made, plus who knows what else. Probably not worth it.