First, before you do anything else, update TurboActivate to the latest version. My guess is that's the problem. If it doesn't solve the problem, we can at least continue on knowing that we eliminated bugs that we've already fixed. (It's not useful for us to dig into bugs on older versions of our software -- in other words, why look for a solution to a problem that might've already been fixed?)
>> "- connected to the internet"
If TA can connect to the internet and reverify with the servers then it will convert the offline activation to an online activation. This is by design.
Customers that wish to offline activate and never re-verify with the servers must implement a usable internet policy in their organization. (Meaning, actually block traffic).
If you're just testing things on your dev-machine then you need to re-create what happens in a real-life scenario for customers without internet access (namely, you need to actually prevent internet access).
But, like I said above, the first step is to upgrade TA to the latest version.