That parameter is no longer used but was used to remove the stock quantities being displayed. Elements on the product and detail pages are now set in the vsadmin/includes.asp so you would remove the 'instock' text from the product layout parameters as described below.
However, your example detail page is referring to the 'out of stock' message on what is/was the buy button which really cannot be removed unless you remove the buy button.
I think there may be a bit of confusion about the parameters and I see what Phil is thinking, that this parameter is for adding the stock level to the page layout. But it's actually for not showing products that are out of stock and I think the problem here is that the stock for this product is set by the options and this parameter doesn't work in this case, only where the stock is set on the product itself.
Hi Michael I'm afraid the answer is that if the product is out of stock because all the options are out of stock then you can't stop it displaying I'm afraid. It's just a limitation of the system. Products that don't have the stock set by the options can be hidden. Sorry about that.