Unfortunately the in-game friendlist is synced to your steam friendlist, so if you don't want them to show up anymore you would have to remove them from your steam friendlist
#Hide players in my friends list
oblique gulch
flint shoal
But it only shows the ones who have purchased the game, not the entire list. Is there no way to make it reset to only include who still has the game?
oblique gulch
I am not sure. Their profile will still continue existing even after a refund, so technically their steam profile is still linked to their in game profile which the friendlist uses to sync. You could try to remove them from your steam friendlist, then relog in game and after it synced up try to add them again in steam but I don't know if that will actually work
flint shoal
That's what I was thinking