Not sure what the payor was trying to do with the corrected 1099 - but they probably shouldn't have done anything.
As for your filing, you need to allocate your income based upon where you lived when your received the income. (I assume that you don't have any non-resident income from Michigan, e.g. a rental property). And then you just have to claim the state withholding on the Michigan return. Yes, that will likely mean that you get a refund from Michigan and have a balance due to Colorado.
