In May 1999, Paterno told Sandusky he wouldn't succeed Paterno as head coach. On July 1, 1999, Paterno announced his surprise early retirement effective at the end of the 1999 season. Paterno never removed Sandusky. Sandusky retired or was allowed to retire after another season. If Paterno's actions in May 1999 were because Paterno knew about the investigation that began in May 1998 and produced a report, then that's where things get nasty.
During the entire 1999 season, Sandusky brought a fourteen year-old boy with him to every home game overnight at Toftree's. Sandusky and the boy sat at the coaches' table for the pregame banquet and Sandusky sexually molested the boy in the shower and room while the surrounding rooms were filled with Penn State coaches and players.
If Paterno know (as your 'removed' suggests), then Paterno sat with the boy and Sandusky at the coaches' table and watched them spend the night for an entire season.
Sandusky was also allowed to bring the boy to the Alamo bowl - where he sexually molested him.