Thanks for your thoughts.
I'm measuring the voltage of the output by placing a DMM parallel to the output and ground.
And i'm using this S7V8f3 Buck/Boost Schematic.
While testing the regulator without a load, when shutdown mode is triggered, voltage starts to drop, and it takes ~40s for the level to drop to 5mV. This is consistent with your explanation of residual voltage drop due to capacitance.
The loads I have connected are, an arduino pro mini and a sparkfun fuel gauge.
If I just have the arduino as the load, shutdown seems to work fine.
But when the sparkfun fuel gauge is in the mix, the buck/boost VOUT rests around 1.2V in shutdown mode.
To figure out what may be the problem, I studied the schematics of my loads.
The fuel gauge schematic shows the I2C (SDA, SCL) lines are being pulled high, via VCC, which is connected to the regulators VIN and the battery (necessary to read the battery level).
The arduino pro mini schematic shows the I2C (A4-SDA, A5-SCL) lines are also being pulled high, via VCC, which is connected to the regulators VOUT.
So it appears that when the regulator is shutdown, the I2C lines are powering the regulators VOUT via the pull-up resistors on the fuel gauge.
To fix this issue, I removed the pull-up resistors from the fuel gauge. (see image)
Now, the buck/boost regulator can shutdown with the fuel gauge connected.