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The dispute part of the process is for negotiation between you and the seller, so if the seller agreed to a refund and you disposing of the item then thats fine, as soon as they issue the refund the dispute would close.
However if the seller did not refund and you escalated the dispute to a claim then that is when paypal get involved.
They do not deal in part refunds or disposing of items the ONLY option paypal gives you if they find in your favour is the return of what you received back to the seller (trackable to prove delivery) before you get a refund.
Once you have provided that tracking number to paypal then if the seller has not refunded you then paypal would.
Sadly as you did not do so you didn't get your refund.