I'll be really interested to see what some of the more experienced folks around here have to say. But a few things that jump out to me....
Would the title company be responsible for some of this since they didn't catch it?
Wouldn't it be the title
insurance, technically? Seems like a good time to haul out a copy of that insurance policy, which was probably in your closing documents, and see what exactly it covers. I don't think they usually look at permits, but if it was in the records as a SFR rather than duplex you might be able to use that for a claim...?
Part of me thinks I should just sell and make this someone else's problem.
I would guess this qualifies as material information about the property that you would have to disclose to a potential buyer, who would then adjust the price accordingly. Since you're on the city's radar now, they'll probably mention it in the sales inspection, so I doubt you could get away with "accidentally forgetting" to mention it even if you wanted to. All the retail buyers are likely to be at least as scared of this as you are, so you'll probably get people that look for distressed (ie, cheap) situations.
Part of me wants to hold someone accountable for this screw-up.
Well, the party actually accountable is whoever did the conversion, but good luck getting them on the hook 15 years later...