Sorry—it looks like another agent is working on the question you posted in the California state thread, so I have to continue in this thread…
According to the amendment instructions (here), and those for Schedule X (here), you should do your new Form 540 with all your income and deductions (so that it’s a complete and updated version, showing a smaller refund because of the new interest added to everything that was on that form the first time around). Then your Schedule X (here) reconciles the smaller refund (on line 4) with the one you already received (line 2), and the difference will be your new tax due on line 7 of the schedule. So you’re basically fixing the 540, and the only reference to there being an earlier version (except for the “Amended Return” box being checked on the 540) is on Schedule X.
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