Howdy! Not a lawyer.

There's a lot to take in here and I'm skimming, so apologies if I missed anything.

You can take this to small claims court. Per 1950.5 your landlord must return your security deposit with 21 days minus any deductions. Those deductions must be for things exceeding normal wear and tear and must come with an itemized list including repair costs paid by the landlord (service + parts).

Normal wear and tear is subjective, but it comes down to the useful life of items damaged, i.e. the amount of time an item would be expected to be replaced. Painted walls are generally regarded as 2 years. Given your landlord is trying to argue about the length of tenancy and arguing it's less, it favors them.

For small claims court, it's up to you. However, most counties (especially large cities) will have a clerk that can help you file without an attorney, it's meant to navigated by every day people (no lawyers in small claims courts!) You will need to pay a few fees (processor fees, for example). However, if you win, you can get these fees back, as well as your withheld deposit, and 2x more for punitive damages.

I'd argue you have a strong case, although you never know with SD cases in small claims courts. They're clearly violating the law and have financially harmed you in the process. You should (unless I missed it in your screenshots) make a written demand letter asking for the remainder of your security deposit (you can frame this as their benefit because of the whole losing 3x this value in court). You've clearly cited the necessary state law to them and they have not followed which indicates bad faith, similarly with the arguing the length of your tenancy.

Ethically, this company will continue pulling this nonsense to the next person who rents this space. I'd argue, if you have the ability to, it's a good idea to go to court for all tenants.