Try validating the local files for a game that uses it. Smaller games will validate more quickly.
That did it, thanks!
That alone doesn't work until proton related appmanifest_xxx.acf file from library folder is also removed. Only then Steam successfully sees proton as missing and re-fetches it.
proton 3.7x1 2018-08
I tried deleting the Proton 3.7 Beta dir inside steamapps/common and then disabling and re-enabling proton from the Steam UI but that didn't work