Yes, Pub 590-A states "You won’t have to pay the 6% tax if you withdraw an excess contribution made during a tax year and you also withdraw any interest or other income earned on the excess contribution." Therefore, you would have to pay 6% penalty on the excess contribution amount not the earnings.
No, you do not make a new contribution/move funds into the IRA to apply an excess contribution from a previous year as a 2025 contribution. This is all done on Form 5329.
It might be best to contact someone at the IRS since this is a complex situation and it wasn't your fault. IRS phone number: 800-829-1040, 7 a.m. to 7 p.m. local time. Please see IRS Help for details.
Please see How do I file an IRS tax extension?
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