The second question is Kde ho vidíššššš? Which ends on a sh sound and the last word of the sentence means see, as in Where do you see it?

I'm Czech. The Czech version of the joke is indeed no funnier than the English translation (unless you count the bit of variety in the degassing sounds) and it's a preschool classic. Here is the most common version (they’re all basically the same anyway) and a literal translation:

Letí dva balónky po poušti. Jeden říká: „Pozor, kaktusssss!“ — „Kde ho vidíšššššš?“

Two balloons are flying across a desert. One says: “Watch out, a cactusssss!” — “Where do you see it? shhhhh...”

I think your colleagues had a very dark or offensive joke, as these are common in Czechia. Not wanting to get into trouble, they quickly replied with the first one that came into their mind and then made up excuses for laughing so hard.