If I sell a rental that I acquired using 100% qualified retirement money from a Solo 401(k) and immediately deposit the proceeds back into the Solo 401(k) would I have to do a 1031 exchange purchase or purchases to avoid capital gains or is this treated differently within a Solo 401(k) retirement fund/plan? 

Your property can be treated as both an investment property and a personal residence.

In this scenario, where I’m going to have to hire a cleaning company and possibly treat the unit for the smell, I feel entitled to the security deposit.

I'm not used to dealing with roaches, but if you paid a company to treat it, there should be some sort of warranty for a period of time. 

I would likely treat the duplex as a long-term investment, focus on the cash flow, and disregard the fact that it's supposedly worth less than what I paid for it.

I mean to treat this purely as an investment property and will bite the bullet of living in a property for a year.

You have to treat everything with a business mindset.

. -- Lastly, does anyone have any insight on how lenders are currently treating individuals who have been out of work and have lower reported income due to covid?

The payments received by the seller over time are still taxable to the seller as long-term gain (though the seller may want to consider possible changes to how the feds treat gains taxes in coming years). 

Even if you go the owner finance route, they can still pull your credit and treat you as if you were trying to get traditional financing.