Your situation is a perfect example of why you should never relist or make a second chance offer until the transaction with the original buyer has been completed.
Rather than making a second chance offer, an unpaid item dispute can be filed in as little as 2 days after end of sale and closed 4 days later. The appropriate time to make a second chance offer would be after the dispute has been closed and an unpaid item strike given.
" One would think if it's been paid for, ebay automatically ends second chance offer"
That would be unnecessary especially if you had an identical item in which you could make a second chance offer to an underbidder.
Apologize to the second buyer and refund their money through paypal. There's an issue refund link in the payment transaction.
In order to get your final value fee credit for the second chance offer, you will have to submit a transaction cancellation to the second buyer and they would have to agree to the cancellation. If they select decline, you would still have to pay the fees.
Non paying buyers deserve unpaid item strikes.