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Now that the money has been paid, you can’t reverse the sale of the shack.
The present executor is allowed to finalise the two estates concurrently.
The municipality has to rectify the issue, but you will likely need to settle the bill pending resolution of the dispute.
SARS would have considered that you had defaulted on your previous payment arrangement. That would have weakened your case to be granted another payment deferment arrangement by SARS.
The simplest route would probably be to get help from an organisation that regularly deals with Home Affairs' dysfunction.
She could ask the municipality if they could endorse the project and give her official approval for it.
You can lodge a complaint with the Legal Practice Council and lay criminal charges with the police.
You could draw up an affidavit that both you and the mother of your child should sign.
If your mother and father divorced, they would each be entitled to 50% of the joint estate created by being married in community of property.
As it is your mother that is South African, not your father, I don’t think they should require a DNA test from your father. However, they might want one from you and your mother.