1. Why when I try to import that category, it thinks those posts already exist (is it looking at my other site - mindschmootz.net?)
The WordPress importer does a check for posts. If you have run the importer multiple times, it will not import the same post multiple times.
It is not looking at your other installation.
2. How do I start over, import all posts, pages, etc and then change where it's pointing to?
Delete all the posts, etc on the dev site and then run the importer again.
There's numerous ways to switch from dev to production.
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