When TurboTax is asking you if you "overfunded" (had excess contributions to) your HSA in a previous tax year, it only wants to know if you made excess contributions and CARRIED THEM OVER to this tax year.
When you withdrew the excess for the previous tax year early in the current tax year, you "cured" the excess contributions for the previous tax year, and therefore should enter zero (or just leave blank) the entry for overfunding from the previous tax year to the current tax year.
The purpose of the 1099-SA with the code of '2' is to report on the earnings that the excess contributions earned while they were in the shield of the HSA. These earnings will be added to Other Income in the current tax year, while, as you noted, the withdrawn excess contributions were added to Other Income in the previous tax year.
[Edited 3/10/2020 4:20 pm CDT - made year-neutral]
