I have two word schedules, one with "When generating multiple choice questions, first choose from terms in this schedule" turned on, and one with it off.
I studied the schedule with the experimental feature turned on, which also has "Mix in terms for review" enabled. When the study quiz includes something from the other schedule, it generates a multiple choice question with only one option.
The schedule does have other terms available, so it seems strange that the question generated this way.
Also, for quiz-related issues, it is ideal to tap the ? button at the top of the app, then send a quiz report (while in the quiz). That'll give me a copy of the quiz data, which helps in isolating the issue.