You cannot change durations of recurring events after they are set up, only when you create them. (I believe that this is to prevent one of the recurring events from becoming out of sync with the others.)
Thus, you, need to click and drag in the day/week view to set the start time and duration of the recurring event, then set the recurrence once the dialog shows up. I just tried that and it works.
I would agree that this is a bit of a clunky design for the calendar (not my design)... Hopefully, I will find some time to make improvements in the future.
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