The availability of this option in the Office 365 portal is so you can de-activate the licenses without having to have the system available.
When you use this feature it does not "reach" out to the machine in any way. The next time someone on that machine logs on after it's deactivated they receive a message that it is not licensed and they need to logon with an account that has a valid license.
@b52703 you have indicated it's working for other entries but this one. If you have admin access to the Office 365 subscription (If you do not have your Admin try):
- Logon https://portal.office.com/Admin/Default.aspx#ActiveUsersPage
- Select your user account
- in detail pane you will find a section for "Office Installation" click "edit"
- Have them try and de-activate the license from here.
I've looked a the user and license objects in powershell but don't see a method there to manage activation. So if the above doesn't work - your next step is put in a support ticket and have Microsoft support remove it forcefully.