Purpose of Legolas' affliation to the Elves
No, a nation cannot become inactive once it is active.
Legolas just has the nation symbol for thematic purposes. He is an Elf, so he has the Elven symbol.
This is consistent with the other Companions: Gimli has the Dwarven symbol, Boromir the Gondor symbol and Strider the North symbol. But for game purposes Legolas' symbol is indeed pointless.
Similarly, the Shadow characters also have a nation symbol, which are also pointless for game purposes.

However, the expansion, 'Lords of Middle Earth' makes him inconsistent with the others.
The expansion has alternate versions of the Companions who don't have a nation symbol. They can only activate their respective nation with an ability using an Action Die. But because the Elves start the game active, they did not remove the nation symbol from the new Legolas. It is still pointless for him to have it.