Lets say that I use this card after an enemy has declared their attacker(s). And lets say the enemy only declares one attacker. Does that then mean that their unit card can no longer be declared as an attacker and I then place my defenders and proceed to the edge battle?

I know if they happened to lay more than one attacking card down it would simply stop the one focused unit card from attacking in the engagement, but the engagement would continue as normal.

Basically,.. Im wondering if I still proceed with the normal engagement steps/edge battle if I only have one attacking card that was just exhausted by an enemies event card?

The engagement proceeds as normal. Placing a focus token on a unit does not remove it from the engagement, no matter when or how that focus token was placed. That unit will not be able to strike during the battle unless your opponent plays one of the many cards which can remove focus tokens.