Interesting questions and thread! It's a huge, complex topic of course with many layers and I think it can be discussed from hundreds of different angles, hard to come up with one simple, elegant idea that would cover all of it.

I am a neuroscientist and like, for example, Antonio Damasio's work on the function of emotions in decision making - there is a lot of info online and he wrote a few books as well. It is based on how emotional regulation works in the brain and how it interacts with other processes (cognition, perception) and behaviors. I personally like to approach it in this more organic way, looking at how the brain works and regulates behaviors, rather than the (for me) more esoteric, older theories in classical psychology that do not go very far in terms of causality. Emotional regulation and dysfunctions are not so much different from the regulation of other physiological processes, like reactions to physical pain, it's all biochemistry.

As for the function of emotions (both positive and negative), I think it's more complex than just protective. They play integral part in every decision making process, including unconscious ones (which are the majority anyway). Damasio's work has shown, among other things, that individuals who have lesions in critical parts of the brain that processes emotions have serious issues with making accurate assessments and decisions. I also like the "antennae" analogy ruh roh brought up - among many other things, emotional processes are part of how we interact with the external world. They are the inner responses to perceptions - accurate ones and imagined. If they are out of balance, it can lead to distortions in our image of reality (okay, not getting into what "reality" is...) and in our responses, both in feeling and actions.

Early life experiences are especially important in setting up the mechanics of individual emotional regulation because the brain and our whole system is developing until our ~mid-20s, thus more vulnerable. Adverse life experiences in childhood and adolescence can interfere with the balance and functioning of this developing system, and often the effects become very persistent and life-long. (This is actually my research area: how this works biologically, in terms of mechanisms and behavioral outcome.) It is not the momentary (or even longer) feeling of hurt that is most important, that's just part of the reaction. It's how stress, traumas (especially if long-term) affect the brain in a complex way, how ingrained the effects become, and how an individual can cope and function with the whole makeup.

Consciousness, including our sense of self, is another fascinating area... there really is still quite little known about how it works, but it is clear that emotional processes play a role. Only one reason why artificial intelligence needs to integrate some level of emotional-type processes, otherwise it remains very limited and won't be able to interact with the external world very effectively.

All this reminds me of what many therapists claim because it's their work, about the "transforming" effect of increased awareness. I definitely believe that being more aware of our inner world and reactions to the rest of the world can make a big difference in accurately assessing situations - but consciousness can also hinder it. There is a reason why the majority of decision making processes are unconscious by default - it often serves survival and enables us to react quickly to situations where such response is essential. But my biggest criticism about the power of psychotherapy goes back to what I said above. It can affect some of those old, ingrained neurobiological processes that cause problems in functioning, but in most cases nearly not enough, in order to make serious changes. Hence the function of psychotropic medications, but those can only work on what is already there and won't take us back and change our long-term development over many years and decades. They also do not account for individual variation much. Also, awareness on its own is simply just knowing, it is not action.

But going back to the hurt feelings - obviously it's very complex, sometimes the negative reaction can be protective, but they can also create massive fears and avoidance, or even seeking out similar, hurtful and damaging experiences, distortions about ourselves and our interaction with the world. It's far from simple, black-and-white, IMO.