You can only define the bridge in one place, either in paper UI or in the .things file. I installed OH2 and you should be able to do everything from paper UI. Try:
- Go to Inbox and press the +
- Select Insteon Binding
- Select MANUALLY ADD THING
- Select Insteon Device
Configure the device, make sure to pick a bridge or it will not work. I configured C1 and I have the following:
And when I check in the console, I see:
openhab> insteon display_devices
insteon:device:C1 address = C.1 productKey = X00.00.01 channels = switch
openhab> insteon display_channels
insteon:device:C1:switch feature = switch parameters = {}