Originally posted by Stonewall
This isn't an EEP or 1.7 error. Since the Ottomans already exist as a nation, you can't release them as vassals. Go to the diplomacy screen and click the Ottomans. Then choose the cancel vassalization option. That should work, but it will cost you some stability.
It doesn't, at least in my experience. It is always greyed out. At war or at peace.