It is deactivating. You can prove that by touching "D" sprite before "S".
The issue is that you want to stop the rotation by deactivating the group, but that's not how you are going to achieve that. When you deactivate the group, you deactivate the events that are inside it. But once you touched "S" with the group active, you already set the rotation speed to 180º/s. In order for it to stop, create an event with set rotation speed to 0º/s.