Yes, but they also could have gotten run out of the building from the opening tip and you would have gotten nothing.
If you feel like the book was "freerolling" you (i.e. they would have paid out $0 if Nicholls lost, but only half if Nicholls won), then you'd have a complaint. But it sounds like they paid out your 6-leg parlay appropriately and then left it up to you whether to do a single bet on the 7th game, which you then declined. Seems fair.
Seems fair, until you're in that position. I keep asking myself what I would've done if I was given the opportunity to decide. I'm still not sure, but part of the beauty of setting up parlays is so the hand is forced for you. Instead of making it black or white, you have the opportunity to hedge at a 1/4 of the payout. That's more fair to me.
I get why they don't want to give the opportunity for it to be a stand alone game. Regardless of the psychology behind it, at the end of the day, I won the bet and didn't receive reward for it. There is not total fairness in that as you suggest. If I wanted to do high value single game bets ($350 on Nicholls) instead of parlays, I would.
In conclusion, I'm not even sure how their policy should be set. Giving the decision, honoring the parlay or just voiding. But just voiding is certainly not 100% fair.