"My product line is ZZZZ and I have changed the product type from finished goods to discontinued. I've also checked the box to make it inactive."

I assume this means you went to product line maintenance and changed the fields there? Once you have made that change you must immediately use the APPLY button. If you exit the product line first and then come back it will not recognize that you have made a change.

You cannot use this feature to move an item from one product line to another. You would have to manually do that or use VI to change a number of records.