Is it normal that you cannot add a 'Failure type' during test execution? Currently I have found that you can do it after the test execution when updating the test result. is there another place where you can do it?
No, you can only apply it after the test run. The thinking behind it is that once a test run is complete and you close MTR you will be looking at the test results page and can set the failure type there (and in some cases you may have to research it to see if, for example, it is a Known Issue or no). In addition, automated test runs require examination of the run after the fact to determine if/what failed and what the failure really is.