Can chaining hash functions reduce security?
Yes, there are concrete cases where chaining cryptographic hash functions reduces security; and you gave one. SHA-256(SHA-1(x)) is in particular less collision-resistant than SHA-256(x). We now know collisions for SHA-1(x), and these give collisions for SHA-256(SHA-1(x)), but not  SHA-256(x).

More generally, a chain of hashes is neither more collision-resistant, nor second-preimage-resitant, than the first hash performed is. Thus inserting a weak hash as the first/inner is a recipe for weakening an otherwise fine hash.

On the other hand, SHA-256(SHA-1(x)) resists length-extension attack when neither SHA-256(x) nor SHA-1(x) do; and SHA-256(SHA-1(x)) can be more resistant than SHA-256(SHA-256(x)) is to some attacks in some Proof-of-Work protocol; thus chaining hashes, including different hashes, can have some benefit.