I decided to let my P1 account from the beta expire, and wanted to remove my vanity domain from the account.

I opened the admin interface, went into the domains section, selected my domain, and tried to remove it

However, I got the following error:

Fair enough, my public website was still using it. So I reset it to use the xyz.sharepoint.com domain, and tried again. The "Cannot remove domain" error disappeared, but the new one "Unable to remove domain" showed up now:

Again, understandable at first, as the login names and email addresses for my two accounts still used my vanity domain:

So, I updated both of them, tried again, but the error remained. I couldn’t find any reference to my vanity domain anywhere at all, but I read in the Office 365 community forums that it might still be associated with my Lync account. I found the final solution to fix it in the following thread:
http://community.office365.com/en-us/f/148/p/293/706.aspx (post by Mike_MSFT on 2011-May-12 4:42 PM).

Going to the Users overview in the Admin portal, you need to create a new view:

Enter a name, select the vanity domain that you want to remove, and click save:

Selecting the view you just created, you can then see all the users that are still associated with it:

As a last step, I deactivated the Lync license for each user, and reactivated it again afterwards.

Once I was done with all users, I was able to remove the domain successfully.

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