I can't get the deactivate event to fire What am i doing wrong?

This code seems to run for me: I got rid of your while loop and instead keep track of time using tick() since tick() returns the current time.

local player = game:GetService("Players").LocalPlayer

local UseEvent = script.Parent:WaitForChild("Use")
local DeactivateEvent  =  script.Parent:WaitForChild("Stop")

local Key = "M" 
local startHoldingTime = tick() -- time when the player started holding. tick() is the current time
local expectedHoldTime = 3 -- How long you want the player to be hold the key for

local isBeingUsed = false

-- runs whenever the player presses a key
game:GetService("UserInputService").InputBegan:Connect(function(Input, gameProcessed)
    if gameProcessed then return end -- stops this event from firing if we're typing / roblox is using the keys in some way

    if Input.KeyCode == Enum.KeyCode[Key] then 
        startHoldingTime = tick()
    end
end)

--runs whenever the player stops pressing a key
game:GetService("UserInputService").InputEnded:Connect(function(Input, gameProcessed) 
    if gameProcessed then return end -- stops this event from firing if we're typing / roblox is using the keys in some way

    local timeHeldDown = tick() - startHoldingTime --how long the player held down the button in seconds

    if Input.KeyCode == Enum.KeyCode[Key] then
 		print(player.Name..' holded '..Key..' for '.. timeHeldDown ..' second(s).')
		
		--if the player is using the mode already, fire the deactivate event
		if isBeingUsed then
			print("Firing the deactivate event!")
            DeactivateEvent:FireServer()
			isBeingUsed = false
		--if the player HASN'T used the mode yet, check if they held the key long enough to use the mode
		else
	        if timeHeldDown >= expectedHoldTime then 
				print("Firing the used event!")
				isBeingUsed = true
	            UseEvent:FireServer()
	        else
				print("player didn't hold key for long enough to fire any events. ")
	        end	
		end
    end
end)

if this code doesn't work, make sure you have your events on the server working should look something like this:

local UseEvent = location of the use event
local DeactivateEvent = location of the deactivate event

UseEvent.OnServerEvent:Connect(function(player)
	print(player.Name .. " fired the use event!") 
end)

DeactivateEvent.OnServerEvent:Connect(function(player)
	print(player.Name .. " fired the use decativate event!") 
end)