Hi @TrishaMeyer1,
This has been brought up as an issue with the way Canvas handles launches for external tools like Chat in some other discussions I've been a part of with other Canvas admins around the country. Basically, hiding the menu items only makes them invisible from students, but because the tool ID is the same, students who have multiple courses can go into another course with a tool enabled, grab the path to that tool(like courses/zzzzz/external_tools/yyyy), then just modify the course id to whatever other course they want, and Canvas will happily launch the tool for that course.
This seems to just be the way Canvas has been architected from the beginning, so I don't know how feasible any kind of fix really is without potentially breaking all kinds of intended functionality. It was suggested to have a way to not only hide, but totally disable the external tool for the course, which makes sense to me but some other admins were quick to start discussing drawbacks of that approach.
If the entire school does not want to use chat, it could definitely be removed from the entire Canvas instance and that would leave no way for students to use this workaround.
-Chris