Oxygen produced by the first life this planet had for over 2 billion years was a waste byproduct. And the amount of oxygen it put off actually caused the first of the 5 major extinctions the planet has seen, which then made it possible for life that required oxygen to flourish.

We aren't looking for oxygen to prove life per say, but for certain elements which if in certain amounts with combination of other elements would indicate a strong suggestion of life.

Hope that helps.

Edit: Oh, also, almost forgot: it is believed by some that the overabundance of oxygen in our atmosphere helped accelerate the extinction of the non-avian dinosaurs due to the atmosphere being volatile and susceptible to longer hotter fires. Oxygen is garbage lol