I thought Spike's chip was removed in The Killer In Me. As I recall, Buffy called the Initiative for help because the chip was malfunctioning, giving him seizures and nosebleeds. The guys on the scene said the chip was killing Spike and that Riley had told them to do whatever Buffy decided.

SOLDIER: Med team tells me they took a look at the chip. (nods) You were right. (crosses arms) It's degraded. Leave it as it is much longer, it'll be fatal to him.
BUFFY: (swallows) OK. So, how long t -
SOLDIER: Now.
BUFFY: (breathes out heavily) Right, of course. Um, what do we do next?
SOLDIER: Agent Finn said it was your call, ma'am.
BUFFY: My - what was my call?
SOLDIER: All decisions regarding Hostile 17 are to be left in your hands. This chip...we can either repair it... or remove it.
Buffy blinks, looks down, and takes a deep breath.

She told them to take it out, and I think they probably would have told Riley they had.

OTOH, your fic may be following an AU sequence of events. If so, I've missed the turnoff.