In Proven Guilty, Michael never says there's a documented case of someone getting rid of the shadow by walking away from their power. He only says that's the only way he knows how.
It's entirely possible that this is a theory that someone in the Church came up with based on what they know of the Shadow and how they work.
It's also entirely possible -- probable, even -- that the average magic user who gets a Shadow into their head has the exact same reaction as Harry to the suggestion.
Ergo, even if your interpretation of Michael's line is correct, there's not necessarily a contradiction.
After all, Michael and half the villains know how to unmake one of the Swords; but it's apparently something that's never happened. Knowing how to do something doesn't mean that something has actually happened before.
In the meantime, I'd like to see something that indicates that Michael definitively learned that he was wrong. Where did he do the research (of records that Nicodemus regularly destroys)? Did he find another magic user in the intervening two years that -- again, in that time frame -- gave up the power and still had the Shadow?
Where are we positing that Michael learned this?
My problem is that his statement in
Small Favor is so absolute.
Honestly, I just think it is a continuity error that can be explained away in a manner that reminds me of a Babylon 5 quote.
"Captain. If I were you, I would quit while I was ahead. Back on Minbar, there was a saying among the other rangers. Only way to get a straight answer from Ranger One was to look every reply in a mirror while hanging upside-down from the ceiling."
"Did it work?"
"Oddly enough, yes. Or, after a while you passed out and had a vision. Either one, the result was pretty much the same."
-- Marcus and Sheridan in Babylon 5:"War Without End #1"
What are the explanations? Here are the one's I remember in no particular order.
1: The
Proven Guilty statement is implicit in the
Small Favor conversation.
2: Michael changed his mind
2a: and didn't tell Harry.
2b: and told Harry off page.
3: Michael lied because [reasons], but those reasons are no longer there or are superseded in
Small Favor.
4: The
Proven Guilty statement was a theory that hasn't been tested.
5: It's a continuity error.
6: The statements are in no way contradictory.
I don't think anyone is proposing that Michael was lying in
Small Favor.