Is there any way to link the custom approval workflow with the content approval in a list? Items shall only be visible, once they are approved (through the approval workflow). As I understand only Content Approval is restricting the visibility of items.
As I figured out, the solution is very easy:
In the workflow settings check the box Update the approval status under Post-completion Workflow Activities. The box is disabled, if the workflow is started when an item is changed under Start Options, which was the case for my list. However, I do not know why there is no possibility to go back to a pending approval status, once the item is changed.
Content approval has to be enabled under List Settings -> Versioning Settings.
Yes, you certainly can link them, it's a really powerful way to manage content approval.
If content approval is enabled on your library, then when you associate the approval workflow to the library you will have an option to "Start this workflow to approve publishing a major version of an item". Select this.
Then when you are configuring the workflow details, on the second page there is an option to "Update the approval status for a document or item after the workflow is complete", check this as well.
Then, you users can work away on draft items, and when they choose to publish, it will automatically trigger the approval workflow. If the item is approved in the workflow it will become a published major version and generally visible.