Well, that option is already unchecked (never checked it because we don't want to switch their authentication). So, not sure how you are supposed to disable this option and keep it from displaying to users. It sure would be nice if you could and I believe you used to be able to as we did it on our Moodle instance last year with the previous O365 plugin. I am playing with this option on a test server and it is actually not matching and syncing the users. I had hoped to avoid the fallback of a giant Excel sheet.
My username in Moodle is jbreitenbucher and in the sync it looks like it is looking for jbreitenbucher@wooster.edu to match on in O365. If I just manually try to match to jbreitenbucher then it takes me to a personal O365 rather than giving me the option to pick personal or organizational.