how do I stop gmail from creating an archive?

That's controlled in the settings on the gmail web site.

I HATE the default behaviour of Gmail. Google sets it up this way because they want you to retain as much email as possible in your account so they can data mine it to serve you "relevant ads."

If you want your Gmail account to operate like a normal standard IMAP account compare your settings to mine in the screen shots below and set them accordingly.

Edited Labels screen capture to disable Important label

Check under the tab "Forwarding and POP/IMAP. Do you have your account set up for POP or IMAP?

NOTE: if you are only checking email through a web browser this is not an issue and you can leave it set to POP. If you want to check email using email apps on Macs and/or iOS devices you may want to switch to IMAP.

NOTE 2: If you switch to from POP to IMAP and you already are set up to access email from your Mac or iOS devices this may cause you to have to set up your accounts again using the IMAP protocol on those devices. You will need to backup all your mail to ensure you do not lose anything and may possibly have to re-import your email.

IMAP stores the email on the server so that all computers and devices can sync to the same mail storage and therefore see all the email. For example: Email that is marked as read on one device will be seen as read on all devices.

Since you set up for IMAP I don't have an explanation for why the "Show in IMAP" checkboxes are missing. I searched the web for an explanation but can't find any. I'll keep looking and post up if I find anything.

Anyway, that will only affect the mailboxes (labels) that will appear when you access Gmail from other IMAP email apps like Mail on the Mac or on iOS devices. Other than that, if your settings match the ones I posted, you should have behaviour that is like a normal IMAP account.

It was probably a glitch on the Gmail server. Important thing is that it works now and you can finally configure things to your liking.