WiX 3.7: How to delete registry key on uninstall based on condition set by user?

Normally you schedule dialog's in the UI-Sequence and not in Execute Sequence. When you are not doing this, you can't have a silent (un)-install.

I think your CustomAction (CA) is run to late and the script which will executed is already created. DELETEREGKEY in this case is unset and evaluates to false - result Key stays.

Try to move your CA to UI-Sequence, please.