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On your end there's not much to consider here. You can let them know they refunded the entire order, chances are they'll just write it off. If they ask you to send it back it should be entirely at their expense, do not pay to send it back.
On their end there's more going on. It sounds like they charged you for an item they knowingly did not ship then claimed the refund was already in progress when you complained. They also gave you a damaged item and claimed to be unable to refund that, which in most developed countries would be a breach of consumer regulations. This sounds an awful lot like that company is attempting to scam people.
Not in a developed country. This was a good experience by our standards lol