It's very difficult to remove that kind of cheap freewheel - even with the correct tool - because the slots are so shallow and the material so soft that it's hard to get a good engagement on it.
It's also very difficult to remove a freewheel when the axle is absent. The wheel nut is screwed down onto the tool to keep it from slipping out for the first few degrees of undoing.
So. Given that these two scenarios are present in this case, getting this bastard off intact will be close to impossible. It is possible, however, and enormously enjoyable to just monster it off. Take the whole thing apart by undoing the lock ring. When you're down to the 'block' bang it in the vice and turn the wheel. Being careful not to over tighten the vice so much that it crushes the hub itself.. (Don't ask me how I know this) .