The message you quoted was a reply to mr.roos, who did upgrade his/her Padshop Pro licence, not you.
I purchased Padshop Pro 1 as a separate product on its own a while ago. I never purchased any upgrade to it.
I then purchased Cubase 10.5 Pro which includes Padshop Pro 2. When I installed Cubase Pro 10.5, the installer installed Padshop Pro 2 on that computer and overwrote the version of Padshop Pro 1 that was already installed on that machine.
That purchase and license of Padshop Pro 1 that is just sitting in my account got wasted when I purchased and installed Cubase 10.5 pro.
That is why I think it would be good for Steinberg to change their policy on Padshop Pro 1 and allow us to reactivate that license and move it to another computer if needed. I should be able to move that license to another computer if I want to as I purchased it and it’s no longer usable on the computer that has Cubase 10.5 installed on it. And no, i don’t want to keep unplugging the USB dongle and use it on a laptop just so I can use padshop pro 1 on the laptop as its a unneeded risk to damaging or breaking that USB eLicnese dongle or the USB port.
Your problem relates to the known limitations of eLicenser - you cannot move a licence from a USB eLicenser to a soft eLicenser, also licence transfers to another person must be on USB eLicenser. The first of these answers your original question - generally speaking it is not possible to reactivate a Steinberg licence once it has been placed on a USB eLicenser, even if it is a licence that would have qualified for activation on a soft eLicenser when purchased.
Steinberg are developing a replacement for eLicenser, as has been mentioned several times on the Dorico forum, but there is no confirmed feature set or introduction date. It is expected that any replacement will offer a dongle-free option for Cubase Pro/Artist, Nuendo and Wavelab Pro, also the ability to use at least two computers with a single licence without resorting to a dongle (presumably using some form of cloud reauthentication). Hopefully there will also be a way of transferring licences to another person without using a dongle, as that limitation makes the resale of many cheaper Steinberg products uneconomic.
The current system puts me off buying a used licence for an inexpensive Steinberg product when I will only save a small amount and the licence will be stuck on a USB eLicenser that I will have to buy specially. The only USB eLicenser I own has my Cubase Pro 10.5 licence on it, so there is no way I am mailing that to someone else in case the eLicenser comes back without the Cubase licence. This restriction also depresses prices of used licences. I have an Iconica Ensembles licence I might be willing to sell on, but I will sit on it for a while hoping for an improved licensing system in the future that makes it easier to sell on and perhaps also more valuable.