Is anyone else experiencing this? Even when I answer a first time buyer message it’s still showing as if I haven’t responded?
Yes. It is a known problem and Etsy has said they are working on it. Hopefully it won't take as long to fix as most of their glitches.
It's how it was designed and since replies are counting as normal don't expect a quick fix
It results from Etsy‘s attempt to warn sellers about messages which may appear to masquerade as being from Etsy staff, when they are not.