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OOTP has an under the hood transaction log the game should be moving player via. I can't speak to when a player would retire vice being released, but in the case of Koufax I would expect him to be released exactly as you saw. I'd expect if you have transactions checked it will include retire according to history regardless though the reverse will not be true. If Koufax hits the point in the databse where he no longer has a place on a roster in the future... it would make sense to retire him at that point.
There are instances in the transaction database where a player will get cut, resigned the next day, then cut again... then resigned again. Occaissionally a dev will look at an old copy of the unencrypted database and help out answering questions about weird movements. Those old threads are what my understanding of how it works is based on.
Long story short... pretty much what you said except it pulls from a databse and not so much the real life stats you are looking at.
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