Before giving a tenant keys, at least the first month and the security deposit should have been RECEIVED by the leasing agent/owner in the form of cash or money order to start the tenancy.

Looking for a recommendation of a contractor who can secure the property, change the locks and do winterization.

If you buy a 2nd position you are buying subject to the senior lien; If that lien is in default then the total payoff ( if in default or foreclosure, interest, late fee's, foreclosure fee's, etc. ) is still owed and secured on the home. 

I have secured employment opportunities with three different companies and am awaiting final approval from each of them so I can basically choose the best fit.

You mentioned you dont want to go to arbitration or court....almost no one does as the cost of doing so far outweighs what anyone typically has to gain in suing for specific performance.

What I will love to do is some fix & flips instead of that to start securing those large funds for my REI, unfortunately I'm a poor college student haha.

If I'm reading you right, you have a fully executed contract in which the seller agrees to pay for certain expenses / repairs, and is now refusing to pay for them.I'm also presuming that the $20K reduction was within the contractually allowed due diligence period and was agreed to by the seller within that same period.If that's correct, the seller is in breach of contract.Your attorney should contact the seller and give them the option of performing to the contract or being sued for "specific performance".  

We'll likely be going to small claims court.What I'm specifically wondering about is the security deposit. 

How do you collect the security deposit and the first month's (and last month's) rent?

Last time I saw an article cities were looking for proposals around it but security was a huge factor.