Please ensure that you are running build 5.0.97 or later in order for this to work. Then you can right-click on a VM in either of the following screens to remove it from the Altaro configuration:
- Backup Locations
- Retention Policy
After doing this, you'll see the option to 'Remove from Altaro configuration'.
Simply click on that option and the VM will no longer be visible in the UI as part of your setup.