Not knowing about a 1007 report is a rookie issue...not for you, but the lender. 

They then informed me that I could either move forward with the management services, with a nominal discount of $110 for the error, or revert to the Lease Only Option and have the lease transferred to me without any security deposit, as none was collected by the property manager.This mistake has left me in a difficult position.

I would agree that it is "normal" to have that cushion and buffer - but yes, errors and mistakes are endemic in the servicing industry unfortunately

But a licensed brokerage as you state will have E and O  there is clearly Errors and omissions here that any agent who has half a brain would have seen by personal inspection or reviewing paper work and helped steer the client away form this mess. 

I have tried for the past 3 days without any luck, keeps showing the error. 

I am rookie investor who has not done any deals yet.

As you focus on what you can do for others  opportunities will present themselves to you.For networking try the biggerpockets Facebook groups , try meetup.com, the real estate rookie Facebook groups and any wholesaling groups you can find.

Every lender on BiggerPockets has probably disputed hundreds of appraisals, I know we have and usually with great success, assuming there was an error or a failure to use clear, similarly spec'd comps.

When you ask a question and have done no research on your own or thought to search to see if the question is answered, that's basic adulting 101, not a social media or forum error in my opinion.

It was a fairly good information base, but I found through trail and error that pieces were missing.