If the session variable is set it should cause the shipping rule to not be triggered. If the shipping is not triggered you will not see this section in the cart display. If adding the condition makes it so the shipping does not show regardless then you may need to add another set session value server behavior to initialize this session variable to an alternate value. This way the session variable will exist before the rule is triggered but unless the user makes the pickup selection the value should be set in a way that allows the shipping to be charged.
If you have any further problems with this post back with a copy of your WA_eCart folder and the page you are setting the variables on in a zip archive so we can take a look.