After removing a duplicate flag, I am unable to flag the question as "should be closed...". I am guessing this is because the duplicate flag is under "should be closed...". Is this intended? If so, why?
Both are considered "recommend closure" flags. The duplicate reason is also one of the close reasons with which a post can be closed, and once you retract a close flag for any reason, you can't flag it again, for any reason.
The fact that there's a separate option to link straight to the duplicate reason can make this a little confusing, but as your link says, both are considered under the umbrella of "recommend closure" flags.
There is no bug here; this is status-bydesign.