I was trying to prove that $H_1(D^2, S^1) = 0$ and I came up with the following proof.
Proof: Since $S^1 \subseteq D^2$ we have the following short exact sequence $$0 \to H_1(S^1) \xrightarrow{i_*} H_1(D^2) \to H_1(D^2, S^1) \to 0$$
where $i_*$ is the induced monomorphism from $H_1(S^1)$ to $H_1(D^2)$ induced by the inclusion map $i ; C_1(S^1) \to C_1(D^2)$.
Now we know that $H_1(D^2) = 0$ thus we obtain the following exact sequence $$0 \to H_1(D^2, S^1) \to 0$$ and so we have $H_1(D^2, S^1) = 0$ as desired. $\square$
But now I believe that my above proof is errornous since we would also obtain an exact sequence $0 \to H_1(S^1) \to 0$ implying that $H_1(S^1) = 0$ a contradiction since we know by the Hurewicz map that $H_1(S^1) \cong \pi_1(S^1) \cong \mathbb{Z}$.
What have I done wrong in my proof?
We have the long exact sequence
$$ \dots \to H_n(S^1) \to H_n(D^2) \to H_n(D^2,S^1) \to \dots $$
Since $H_n(S^1) = 0$ for $n > 1$, we have that $H_n(D^2,S^1) = 0$ for $n > 2$ and thus we are left with the following exact sequence
$$ 0 \to H_2(D^2,S^1) \to H_1(S^1) \to H_1(D^2) \to H_1(D^2,S^1) \to H_0(S^1) \to H_0(D^2) \to H_0(D^2,S^1) \to 0 $$
Note that only $H_1(D^2)$ is immediately zero, but we don't know about the rest. So you don't have the short exact sequence you claim. A possible simplification is to consider the reduced long exact sequence
$$ \dots \to \tilde{H}_n(S^1) \to \tilde{H}_n(D^2) \to H_n(D^2,S^1) \to \dots $$
from which we have
$$ 0 \to H_2(D^2,S^1) \to \tilde{H}_1(S^1) \to \tilde{H}_1(D^2) \to{H}_1(D^2,S^1) \to 0 $$
and we also get that $H_0(S^1,D^2) = 0$. Now we can use your idea: note that as you say, we have
$$ H_1(D^2,S^1) = 0 $$
but there is no contradiction, since the other part of the sequence is
$$ 0 \to H_2(D^2,S^1) \to \tilde{H}_1(S^1) \to 0 $$
Moreover, we get for free that $H_2(D^2,S^1) \simeq \tilde{H}_1(S^1) \simeq \mathbb{Z}$.