I think "vuelve" makes more sense, because you're talking to "Pablo" (instead of señor Pablo).
I think it makes more sense to use the informal form.
I agree. I think Duo is clearly using Señor(a) to indicate usted form and using a name to imply tú.
See the tips. The infinitive is volver, thus tú vuelves (present, indicative), remove S for the tú command. (Switch the vowel for usted command ¡Vuelva usted!)
"See the tips"! Click on the "lightbulb" button before you click on "start" a lesson. (Sorry if that sounds patronizing, but someone had to tell me where to find the tips a few weeks ago and I thought others might have similar awareness issues.)