B767 Captain reported they initiated a go around due to an aircraft on the runway.

Narrative

On our flight from ZZZZ1 to ZZZZ we executed a last minute go around due to poor ATC traffic separation and aircraft sitting on the runway while clear to land at 500 feet.ZZZZ is down to only runway XX for both takeoffs and landings. Our flight from ZZZZ1 was pretty normal and we were clear to descent from ZZZZZ to ZZZZZ1 on the transition to the ILS XX. Our clearance was from ZZZZZ1 clear for approach and report established. We complied and configured the plane on schedule. We contact the tower and they asked to slow to approach speed and continue inbound ( not clear to land yet ) In the meantime one plane took off from runway XX while another one was clear to position and hold. As the second plane was clear for take off we were roughly at 1100 feet passed our glide slope intercept and my comment to the FO was this was a little tight. Few second later to my surprise the tower cleared another plane to position and hold while we were roughly 2 miles on final and below 1000 feet. Me and the FO agreed that a possible go around was imminent.The tower than cleared the traffic for take off and almost immediately cleared us to land. I told the tower that this was not going work and the tower told us to continue. We were now at 500 feet and we called go around. The tower then cancelled the other traffic take off clearance ( that plane never moved and it was still by the numbers ) We flew our profile and finally several seconds later the tower told us to fly runway heading and go to departure. Departure give us some downwind vectors. We kept the plane slow at Flaps 1. We than received a bad vector for the visual XX inside the final approach fix; high and across the localizer but we managed to intercept; configure and be stable by 1000ft. We landed normally and taxied to our ramp Suggestion. Really the controller lost track of SA and maybe unable to manage the traffic with only one runway. I don't know what I can recommend by flying out of there the night after I also realized that the controller was also working multiple frequencies which reminds me also received wrong taxi way instructions on the way in. We got clear to taxi in on a ramp entrance where the concrete was missing due to construction. Luckily we stop the aircraft short of it and asked for a different taxiway. That night both the tower and ground controller; most likely the same person; seemed pretty clueless