Yes absolutely they are supposed to work and they likely do.
"Likely"?
As a new user, I too tried to figure out how to make things work by the book using repeats and all the other musical road signs like DC al Coda.... etc... I found it to be very frustrating.
"Likely"?
This is what I found about "unfold":
If you have a song with 3 choruses, and want to convert it to a single large chorus, this command "unfolds" the song into just that; one BIG chorus. This is useful for customizing a song (e.g., changing styles and/or patches at different bars, etc.)
This feature is accessible under the Edit menu.
I don't see what it has to do with repeats other than the whole-form repeat that BIAB inserts. I frequently have 2 repeats within a song and sometimes 3 or even 4. Not much point in unfolding them if I can't create them in the first place. What would I be unfolding?
In any case, my purpose is not to make style or patch changes. And if it were . . .
If you have 2 sections where the chords are identical, but there are patch or style changes, between them, it's not one section repeated, it's two different sections. Why would I want to disguise two sections as one with erroneous use of the repeat sign, implying that they are the same, when they aren't?