To be fair, the fire was rather important to Merlin: he had to kill the mini-hydra before the head within his own body recovered consciousness.
But wait,
Powerful magician, able to conjure fire at will (as demonstrated), but unable to destroy a hydra in a bottle without first building a little camp fire and singing Cum by Yar?
A much better sequence, would have been to have the hydra back in the medal. After all Merlin saw her do the 'Hans Solo out of the metal' trick so he knew what to look for. That would have required him to return to Camelot to learn how to re-animate it and then kill it.
Now we have time constraints and work that requires Merlin to get back as soon as possible. It would also mean in the magical fight scene there would be no need to keep switching to the bottle (unshattered) as the medal would be perfectly safe. As it was, why would you stick it in a specimen jar - it was inanimate so presumably pickled and dead already.
I also wondered why she didn't twig why the old guy was interested in that particular creature.
She comes home, finds her Nemesis rooting about in her palatial gaff. She panics, is he hear to finish her off and end her salubrious contract?
No! All he's interested in is a certain creature she recently stuck in the neck of some inconsequential buffoon. Does she ask, could there be a connection?
Not her (after all she's only a powerful witch woman).
OK then, having killed of the thing, does he destroy the witch. Does he burn down her shack of evil to hide his specific interest. Does he bury her under a convenient rockfall*1.
No, he trolls off back to Camelot.
*1 which is becoming a bit to common in the storyline IMO- Oh no we're outnumbered - I know lets have a rock fall/ building/tunnel collapse.
However, lets be sure not to kill any of the baddies, because that's just not cricket.