Have you tried digging through lockscreen settings perhaps? Samsung keeps burrying these options under layers and layers of menus and sometimes you think you have something completely disabled and turns out you don't, because one little thing was found elsewhere.
Yep, same problem here. I tried moving "SmartStay" toggle into and out of notification area via feature added in this latest update - the icon always stays on. Tried rebooting several times to no avail.
I thought so too that it might be a bug but after tinkering with tons of options in my phone I found that the reason the (eye) icon would not disappeared was because "Smart rotation" wasn't turned off when I touched the "Smart stay" button in the "Notification Panel".
So I had to touched that button for a few seconds to dive into "Smart screen" and unchecked Smart Rotation manually and that's it the eye was gone.
Go into Accessibility in settings, enable "Auto-rotate screen" with that on, drop down your settings and hold "smart stay" for a few seconds, it should take you to the option to turn smart rotation off, and it should now let you. Then go back to manually turning rotate screen on and off! Worked for me... hope it gets it done for you too!
goto settings
my device
smart screen
turn off smart pause for video.
done cos I had the same problem and it was annoying me for ages until I discovered a setting buried away like someone else mentioned earlier.
(SOLUTION) Re: Samsung Galaxy s 4 Smart stay bug, Anyone else have this
I just came across your post and I know it's been a while since you posted but I had the same problem and I fixed it.
Go back to system settings>My device tab>Smart screen
uncheck everything BUT if you were like me, you had auto rotate off so smart rotation is grayed out.
turn on auto rotate, and uncheck smart rotation and that should turn off the eye.