I choose neither.

"Upgraded" leads me to believe that the original circle had been replaced,  he didn't say one was added.
As for being destroyed by the fire or a melting Little Chicago,  a circle was clearly there while Marcone had possession of it after the fire.
The logical conclusion would be that Marcone had it removed when he cleaned his stuff out.  Harry had described his upgraded circle as being pretty high end, maybe Johnny wanted it for his own.

I'm not sure if I would call these significant discrepancies or not but...

Changes

I’d upgraded my summoning circle, which was set in the concrete floor at the far end of the little room, a five-foot hoop of braided copper, silver, and iron that had set me back three grand when I ordered it from a svartalf silversmith.

Peace Talks

  My old copper summoning circle had survived, somehow, at the far end of the room. Maybe the floor of my old living room had collapsed over it, shielding it from the worst of the flames.

And in The Law; part 6 (chapter 8 of the audio book) Harry says he hasn't rebuilt his summoning circle yet.
So which iteration will we see in Twelve Months?

Should the Betas have caught this?

You don't need a body to have a funeral, and you also don't have to have a grave side service.  His friends may not have even known the grave existed.  Yes, Michael and Thomas were both there when Bianca gave Harry the grave stone, but neither may have known that there was actually a dug grave to go with it.  People buy plots all of the time to be buried in in the future, but no actual hole is dug until it is needed.  Also Butters may have used funeral interchangeably with memorial, especially if it is a few friends getting together to remember and there is no actual body.The White Council, that's the wizard's government, which has nothing to do with the city or the state which is vanilla humans.. As far as the vanilla human government goes, Harry would be considered missing and presumed dead, but not officially dead until he had been missing for seven years.

As for the funeral

[quote“Over here,” said a familiar voice. It was later, but not much later. Sometime after noon, maybe? It was hard to tell from the grave. “You’ve never even been here before,” answered another. “I was at the funeral. How the hell would you know where his grave was?” I heard Fitz let out a sigh front-loaded with so much drama that only a teenager could have managed it without hurting himself. “Is it the gaping hole in the ground over there, with the big pentacle on the headstone?” There was a brief, miffed pause, and Butters answered, “Okay. Maybe it is.”   [/quote]

When Butters visited Harry's graveside in GS, he mentions that the funeral had been held there.

As for the government, the WC is the WC, not a government.  I think the quote from Rashid above clearly states that the WC's office would send the forms to the government.

But I understand that a missing person isn't usually declared dead for 7 years. But I think the bullet hole and blood splatter is different from a simple missing persons report.

The quote above is from Cold Days where it specifically states re-estabishing his identity with the government.   

As for the grave, that's exactly what they did at the end of BG.  They filled a coffin and buried it.

Butters states in CD

“I’m still kind of freaking out that you’re here at all, honestly. I mean, we held your funeral. 

Where did they hold his funeral,  if not at his grave,  he didn't say wake or memorial,  he said funeral. Is there another grave for Harry with an empty coffin?

I think he was officially dead, according to Rashid...

I will verify your return and that you are indeed yourself, and will see to it that your back pay as one of the Wardens is forwarded to you. There’s some paperwork to fill out to get the Council’s office to reestablish your official identity with the government, but I’ll see to it that it happens. I think I remember all the necessary forms.”

That wouldn't have been necessary if he weren't officially dead.

Harry didn't want to do a Darkhallow, because he'd have to kill a bunch of people... what if he performed it on the island consuming the inmates for his rite of ascension?

Assuming that he'd discharged Thomas already...
but the power jump from that...

Yes I know that the Darkhallow consumes spirits,  but if Harry were to engage the Banefire in a controlled manner instead of how the Outsiders would have tripped it in CD, one bonfire and spirits they are...

I find this more likely

Was there ever a consensus of reasoning behind the Night of Bad Dreams at the end of Changes?  Or was it just rather blunt foreshadowing of a future related event?