You are correct. Setting your settings in regard to what others can see to "Block" will prevent them to see the type of content you blocked.
The reason why you are still seeing it is because the functionality to gather all your activities cannot be turned off. Hence your feed is still assembled but not shared (or partially depending on your settings). This will enable you to share past activities should you wish to toggle the settings again.
While writing out a more detailed description of the behavior, I stumbled upon the solution myself.
When you try to install the game over the internet, just let it start, and then cancel it. This will both remove the installation and download from the queue, but apparently also remove the knowledge of the installation from the Xbox One.
So:
- Start the online install
- Cancel it
- Return to the home screen
- Notice that the disc tile has now changed to "Install disc"
- Activate the disc tile to start the installation from the disc.
This worked, the game now installs from the disc. Obviously any downloaded DLC's will still need to be downloaded, but for the purpose of this question this is not relevant.
Now, what do you do when you get back home and want to plug in the external drive?
Here's what I did. I first uninstalled the game using the storage management.
This makes my Xbox One forget that I had the game installed. Make sure you don't delete any savegames you have on the console.
Then, you turn off the Xbox One, plug in the external drive, and turn it back on.
Once you do that, the disc tile still says "Install disc". Ignore that. Instead either use your pinned link to the game, the tile for the game (if it shows up on the home screen), or navigate to your games and apps list and activate it. You should get a message saying not to unplug the external drive, and that your game will be ready soon.
A few seconds later you can try again and the game should now start.
Best Answer
If you're worried about save integrity, you might want to look into Xbox Cloud Storage. For existing save files, follow these instructions to ensure they are on the cloud:
This will ensure that even if your save files are erased, you will have a backup on the Xbox Cloud. However, save files are typically untouched when uninstalling games, at least on other platforms. Better safe than sorry though!