I had an order that I cancelled and I refunded the total amount to the buyer. However ETSY kept that item listed on my site to ship, and charged me with late shipping and not responding to messages. The orders to be shipped had it listed as the total amount had been refunded but gave me low ratings anyway. I am not impressed with the STAR SELLER thing.
If the order still appears in your order list, you didn't cancel.
Refunding doesn't cancel. You have to use the cancel option, or go back and cancel if you only refunded.
Note, you cannot cancel an order on the app, only fully refund. You need to use a browser.
Evidently you only refunded and did not also cancel.
It's a two step process unless you select to do both steps in one movement.
Sounds like you did not cancel.
If it's showing that it's late then you didn't complete the cancellation process.