You still see it with taxation, The customer is only blocked for postings
Whe you have set the deletion flag SAP will archive it when you run the archive run.
It archived the customer only when there are no documents from the customer in the system.First archive the documents. (perhaps some sales documents you have to archive to).
When you use archiving normal it will takes some years before the customer is deleted in the system. (first all document should be archive)