Not at all.

Wrong. https://en.m.wikipedia.org/wiki/Naked_short_selling

I understood “this” to mean “borrowing [more stock that actually existed] and shorting”.

As your link explains “Naked short selling, or naked shorting, is the practice of short-selling a tradable asset of any kind without first borrowing [...]”

After someone has setup a covered short, the stock they borrowed and sold is again on the open market, is it not? And thus could be lent out by the new owner, enabling a second covered short?

Yes. It’s called naked short selling. It’s been illegal since 2008. https://en.m.wikipedia.org/wiki/Naked_short_selling

No, your link is about selling shares you didn’t borrow first. What’s going on here is perfectly legal, as explained in that very same link:

https://en.m.wikipedia.org/wiki/Naked_short_selling#%22Norma...