I believe that the dual nationality until age 18 has only been allowed since ~2007. I have lived in Indonesia for 27 years, and have four children here. None were allowed dual citizenship before 2007.
Lolo Soetoro and Stanley Ann were living in Jakarta (1965-1971) during a dictatorship, when the nation was a police state.
Anti-Americanism was widespread and their son was registered to attend public school.
The school registration, a copy of which I saw back in the summer of 2008, stated that the boy was Barry Soetoro, his father was Lolo Soetoro, the boy was Muslim and an Indonesian citizen.
To prove the above, Lolo would have had to provide identification. In the U.S., school districts require birth certificates. I assume Indonesia would have required the same or an equivalent.
If what you say is true, then Barry Soetoro had Indonesian citizenship and a passport. It is known that he traveled between Indonesia and Hawaii a few times, and it wasn’t on his mother’s passport as documents from the State Department show he was removed after 1965.