No, I don't think you need to make separate submissions for the event and the location -- that would most likely yield two average submissions instead of one fantastic one. I do think your changes afterwards clarified what you'd find in the city today (a large, inland bay next to a city of wood), however.
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If I were going to use this in a game, it's enough for me to start with, but I'd still need to flesh out more of its sights/sounds, major economic influences, major attractions, and perhaps another cultural tidbit or three (do they have any celebrations? Dragon's Day, perhaps?). Maybe a few notable NPCs, or religions/cults that were founded after the Dragon left. The bit about blue stone sculpting is and the Wizard's college are good starts, but I'd want more to make it really stand out in the minds of my audience.