The Code W in Box 12 is HSA contributions paid through payroll, if you notice Box 1of the W2 has already been reduced by this amount, so you got your "deduction" right there.

When you didnt have the box checked on the 8889, you had a penalty included, checking that box eliminates the penalty.

Go back and uncheck the box again, you'll see the 5329 light up in the Forms In Use list, thats were the penalty is computed.