SharePoint Online Site Deletion blocked by Retention Policy although no content is retained

This is expected retention behavior. A SharePoint or OneDrive location still included in a retention policy can have site deletion blocked even when the Preservation Hold Library is empty. “Retain 180 days, then do nothing” controls what happens after retention; it does not remove the location from policy scope.

For lifecycle deletion, exclude the site from an all-sites policy, or remove it from a selected-sites policy, then allow up to 24 hours for propagation. Removing a selected site can leave a 30-day grace period; exclusion from an all-sites policy bypasses that grace period.

I would not clear the DLC properties manually. Run the Microsoft 365 “Site deletion” and “Invalid retention or grace eDiscovery hold” diagnostics for the URL instead. They can reveal an invalid or orphan policy, or an eDiscovery grace hold that CompliancePolicyIds does not show. Archived, unlicensed OneDrives are likewise undeletable while any retention policy or hold applies.