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Adobe License Manager does not supprt "floating license". Its like your second assumption i.e. to activate 51st machine either return license from the previously activated machine or procure new license. Meanwhile (in case of volume licensing) the 51st machine may take an "overdraft" license (valid for 120 days) from the license server.
And to "return" a license you would just uninstall the software from one of the PCs? or can you "return" it and disable the software on one of the PCs?
In Acrobat 8, go to Menu Help->Licensing->Return License...
It would disable the software on that PC, there is no need to uninstall it. To get more details, you may read the ALM FAQ at http://www.adobe.com/elicensing/licensemanagement/alm/faq/
It's just too bad that it got disabled. I guess there must have been some heavy customers around complaining since it didn't work out.
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