Two separate questions, but I'll answer both to assist you.
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Why does MN calculate tax on all the income for a part-year return? The key is that Minnesota does not actually tax all of the income. Minnesota calculates the tax by pretending that all of your income is taxable in Minnesota, applying all credits and deductions allowable on that income, and then prorate the amount of tax to the percentage of income that you earned in Minnesota. That is why you see all of your income being used to determine MN tax: Minnesota does not tax all of your income, but it is all factored in to determine the tax.
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How should I have filed? That depends on your situation. You state that you are in PA for a year, but don't state why. You also don't state if you are maintaining a residence in PA, but there are two possibilities. If you are a student, an intern, will be in PA for less than one year, or are not maintaining a residence in PA, then you are a nonresident in PA. If you are a nonresident in PA, you actually need to file a MN resident return and a PA nonresident return. In this case, MN taxes all of your income, but will give you a credit for the amount of tax you pay to PA for the income you earned in PA. If you do not meet the definition of a nonresident described above, then you are a part-year resident of PA in 2017, and your filing is correct.
It is not really possible to file a resident return to one state and a part-year resident return to another state. You are generally either part-year residents to both or a resident to one and a nonresident to the other.
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