To my knowledge for existing versions of Office to date, your legal and practical obligation are as follows:
Delete it from your computer and destroy any copies you retain
Send them your copy with the key.
The way the key verification works, as far as I know, is that:
1) the key's checked for validity and then also against ones widely pirated on the net
2) if a computer on the intranet is using the same key and running the program, the Office product will refuse to run.
I think there's even a way to delete the key from your computer, but I don't think it has any practical implications... the key check only works when the other computers are also running Office off the same key.