Only normalize.css shows up when hosting on github pages?

Yes @import is deprecated. But this development is from modern Sass engine (not 100% backwards-compatible with legacy Sass engine bundled with classic GitHub Pages workflow).
(You can see various places in the Sass docs that indicate a given feature not being supported by Ruby Sass.)
The classic GHP workflow is itself locked to these versions and won’t be using newer breaking-incarnations of its dependencies in order to avoid breaking countless number of sites (managed by lay-persons who are not tech-savvy).

So, your choice is to either lock yourselves to the classic GHP enviroment (can be emulated locally using the github-pages gem) or migrate absolutely to a relatively more modern Jekyll stack and depend on GitHub Actions to build and deploy your site.