"I issued the refund from the Credit Memo and from Prepaid as an Item."
Then you are Done.
"I do go back to the Previous Payment Screen"
You don't Also do this. You don't do Both. You seem to trying to do the same thing two different ways. Either there already is a Credit Memo for you to issue a refund from the top; or, you already have funds on hand as negative AR from an Overpayment condition and don't also need or use Credit Memo. You don't do Both for the same overpayment.
"If I try to issue the credit from the payments screen, the available credits show at the bottom, but cannot "refund check".
If you have One Specific Payment that resulted in Too Much Money, then you issue the refund from there. Then, Do Nothing Else.
If you have No Balance for that customer as Negative AR, and you intend to issue them a refund, then you control how to do this. If you decide to do it with a Credit Memo, you use the Credit Memo function and issue the refund check from the icon at the top, and Do Nothing Else. Or, you might simply want to write a check as a Refund of Income to them, and not use a Credit Memo at all.
Never use two different methods to manage the same information.
