Denying entry and denying residency (let alone deporting) are two very different things in EU law. It's extremely difficult to deny entry to EU citizens (it's only possible for “public policy, public security or public health” reasons) but you can still refuse the right to settle to people who don't work and are unable to support themselves, even within the EU.
But I don't think there is much the Belgian authorities can do in theory or in practice to prevent these Dutch people from crossing the border again. Arguably, deporting (or giving financial incentives to leave as some other states have done) would therefore be a bit futile in this case as it costs a lot of money and the person can still come back almost immediately.
Most relevant is the fact that people who have been asked to leave might be denied all sorts of benefits the locals enjoy. On the other hand, if a person does have permanent residency rights (i.e. they worked in the country for 5 years before becoming poor and unemployed), then even asking them to leave or denying help if they become unable to support themselves financially is difficult (that's what's “permanent” about those rights, they are not contingent on the person's situation anymore).
For these reasons, physical detention and deportation is very unlikely, perhaps even impossible, but formally asking someone to leave might still make sense. The point is to ensure sure these people do not get any benefits and, of course, being seen as “doing something” for political purposes.
Incidentally, all this is mostly unrelated to Schengen. For example, the same rules apply to the UK (including very extensive rights to enter the country for EU citizens) even if the UK still actively polices her borders and issues her own visas.
See also What does European Union “freedom of movement” means? on the Politics Q&E site for some background on the legal basis for all this.
