Updates.
Agent from passport agency called today. Just as I thought, they were thinking I was applying for a passport based on my father's naturalization, therefore that's why they wanted the green card and such and such. After explaining him that I was applying for citizenship through birth abroad to a US Citizen parent and that Sections 301 and 309 of the INA are the ones that apply to me and not the 320, he went on and said that the letter was an error. He agreed that the documents I sent are sufficient to satisfy the required documents they ask for in a situation like mine just that they wanted the original naturalization certificate from my father since I sent them just a notarized copy of my father's naturalization certificate. He said that they just needed that from me so we'll see how it goes from now on.
Also I can't apply for a N-600 right now because they have all the original documents I sent with the application.