When reviewing cards, if I could only remember a word due to the surrounding context, how should I grade the card?
This means that you've formed a context-dependent memory. Context-dependent memories can form no matter what card template you're using, including word cards, since no context is a type of context in itself. If you find that you can't remember a particular word on an Anki card, and you are only able to understand it due to the context of the sentence, it implies that the card is not meeting its intended purpose of helping you recognize and comprehend the word.
Unfortunately, there is no quick fix for context-dependent memories. It takes time and exposure to the word in various contexts to fully acquire it. If the card isn't fulfilling its intended purpose, failing it or grading it good will not make any difference. After you've successfully identified that the card is not helping you, the best course of action is to modify the card by either swapping the sentence with another one or converting it to a word card when applicable. An argument against this would be the time it takes to edit the card, but it's probably not that difficult and time-consuming these days since with cabl you have example sentences at your fingertips.
The final decision is up to you. Personally, I prefer not to fail the card since relearning it won't correct the flawed memory. Instead, I do one or the combination of the following:
- Swap the card with a different card with the same target word.
- Introduce a second card with the same target word (there's a caveat though).
- Edit the card and swap the sentence.
- Do nothing, just proceed with my reviews and hope to eventually learn the word properly through immersion.
If you believe that failing the card will be beneficial in some way, then there is fundamentally nothing wrong with that. However, should you continue to fail it, the card will eventually become a leech. If Anki suspends the card, you need to create a new one with the same target word but a different sentence.