How to modify a final draft to reflect that a conjecture in its preprint was refuted?
If you can prove or at least make a convincing case for the conjecture in the special case you need, I'd do the following:


Describe the conjecture in the special case
Prove or make the convincing case in the special case
Write "in a previous draft, we expected this conjecture to hold generally. However, it has subsequently been shown ..."


If you can't or don't want to argue for the conjecture in your special case, then your formulation works as well.