Okay, I did Step 1 and the figures are back to the correct numbers. I'm sorry, but I don't quite understand Steps 2 & 3. Do you mean create a whole new Table of Contents Style? If so, I tried and it's still incorrect. Is there a way to just change the Figure ^# part so it doesn't get a double entry?
You cannot, without breaking the automatic figure numbering.
You and I see Figure 1, 2, 3, but InDesign only sees the ^# and does the automatic numbering.
You can't crack the code unless you want to destroy your numbering. The only way to break it is to create another file for your ToC, as I said.
In retrospect, the problem lies in automating your bullets and then incorporating it into your Table of Contents. The fastest fix is to separate your table of contents from your report InDesign file. But given the opportunity to start over, I'd suggest you incorporate the figure numbering as text elements in your title and sidestep this entirely. Since the file is already created – and undoubtedly at this point, near complete – I'd recommend the quick fix.