http://www.e-laws.gov.on.ca/DBLaws/Source/Statutes/English/2001/S01006_e.htm
As you can see, by section 8.1 of the Ontario Student Loan Harmonization Act, the government is allowed to sell off their portfolio of delinquent loans to whomever they want. Selling them off in the US is pretty popular. A loan like yours would go for .05 cents on the dollar to a Debt Buyers Association member!!!! No wonder they're so popular. And no, that doesn't mean that you now owe .05 cents on the dollar. A bank writing off the loan has nothing to do with its being reimbursed by the government. And, in turn, nothing to do with what the government, will then choose to do with it. Just like when a credit card is written off by a bank, it still gets sent to collections and may even be sold to them.
Having said that: I'm not sure what's done with student loans like yours in Canada. Johnny would know, but as far as you are concerned, it's irrelevant. If they are sold off, all the rights of the previous creditor are transferred to the new owner.
I can't say why the date of last activity is being chaged on your credit report. Maybe there's a federal portion to your loan and the National Student Loans Centre wants to keep the 6 year SOL period alive by sending incorect information to the credit bureaus. You can challenge this, but you've got be very careful how you word it. For the most part, inactive student loans drop off the credit reports after 6 years, but it looks like someone is trying to keep it alive so it will be eligible for collections, and to put pressure on you to pay up by keeping the info on your credit report.
On the other hand, data on hand about your accounts on any credit report is apt to be screwed up at the best of times without any external intervention. When I got my equifax reports there were more errors on it than correct items.
Ray