No it doesn't, and here's why...
The Islanders are not coming close to a Stanley Cup while Nelson is still productive. That means you are literally holding a very valuable asset and just letting it slowly decay until it has no value - When instead you could actually get rid of that assets while it is very valuable and help this team increase its chances of winning long-term.
Given those two choices, there isn't a choice - Just an obvious path to take.
And you can see that Nelson is already starting to fade. The next contract he gets will probably be his last in the NHL. And if you resign him, the moment you do it cuts his value to other teams down by half at least given the contract he will get.
Lou has already proven he does not know how to maximize the salary cap to the Islanders benefit so there's zero reason to resign any player who will only make that worse, and especially when you trade him for younger assets that is how you will increase the odds of opening up a new Cup window as soon as possible.
The Isles should've traded Tavares when they had the chance and he was in his prime. Nelson is leaving his prime for a team nowhere near a Cup. To not trade him is true GM malpractice.