I created a sample part file to test with, copied your two rules into two new local rule in that document, then ran the one rule to create the TYPE parameter, and its values. Then I manually created the SIZE parameter, then ran the second rule to give it the multiple values. I then created a new local iLogic Form, similar to what you had in your first image. On that finished Form, when I switched between those first to values of TYPE (which are being checked for by the second rule), it changed the available values within the SIZE group. That seems to me like the way it should be, unless I'm just not understanding. I switched between showing the SIZE group as a radio group, and a combo box, bit it continued to function properly both ways. When SIZE was displayed as a drop-down list (combo box) I would just have to click the drop-down to see what values were available, but it still worked.
You can't really change the design or layout of an iLogic Form in any way from an iLogic rule. All you can do with an iLogic Form from an iLogic rule is show the Form, and get feedback (FormReturnValue) which indicates how the form was closed. And if the form was closed using a rule button, it can return which rule it was associated with. If you need to change how the form looks or functions, you will need to do that within the iLogic Form Editor dialog.
I'm using Inventor 2021.2.2, which it seems is a little newer than yours, so maybe I am unable to reproduce the same errors or lack of functionality as you. I'm not sure.
Wesley Crihfield

(Not an Autodesk Employee)