So just bringing this back again, after fiddling with URM for 15 minutes, on the Cotton Event 7 and the bunny girl bug. I couldn't quite find the quoted troubleshooting so I went a different route. I replayed the scene where I talked to the bunny girl (mentioning about overhearing Cotton stressing about something; secretly it's wanting to change her avatar) and that checked the box and I IMMEDIATELY went to go to talk to Cotton about it. It was a conversation I already had, but this time no detours, and did the next step which was "eavesdrop" at the Fox Cafe to hear Cotton & Morgpie chat about it. Saved immediately afterwards.
Just in case you're unsure on how to replay it, make sure you're talking to Bunny Girl and have the choices up. I toggled the URM to show on the side and it reveals ALL of the possible choices with Bunny Girl: BJ, Holes, EVENT 7 Dialogue, and a small future spoiler that I was bummed about learning right away. You can replay that dialogue from there.
