Nd5 is the best response, though not everyone likes the lines. 3. ... Be7 is the soundest retreat, 3. ... Ba5 is the wildest line, 3. ... Bc5 somewhere in between and 3. ... a5 is just an intermediate move. In all lines White is fine, often slightly better if they know what they are doing.
The doubling of pawns is playable (i.e. 3. g3 Bxc3 4. bxc3) as you get the bishop pair and the semi-open b-file for the rook as compensation but I prefer the Nd5-lines. Of course 3. Qc2 can be played to avoid the doubling of pawns (options are very similar to the Nimzo-Indian) or 2. g3 to avoid this line altogether (though you will get Bb4 very likely a few moves later, as Nc3 is a very useful move in the English).
You're on the right track. Now try to play it out. What if black wants to keep the bishop?
3...Bc5? I guess I'm worried about the positioning of the Knight on d5. Say 4. Nf3, wouldn't White be wasting time with 4...c6 5 Nc3?
Nd5 is the best response, though not everyone likes the lines. 3. ... Be7 is the soundest retreat, 3. ... Ba5 is the wildest line, 3. ... Bc5 somewhere in between and 3. ... a5 is just an intermediate move. In all lines White is fine, often slightly better if they know what they are doing.
The doubling of pawns is playable (i.e. 3. g3 Bxc3 4. bxc3) as you get the bishop pair and the semi-open b-file for the rook as compensation but I prefer the Nd5-lines. Of course 3. Qc2 can be played to avoid the doubling of pawns (options are very similar to the Nimzo-Indian) or 2. g3 to avoid this line altogether (though you will get Bb4 very likely a few moves later, as Nc3 is a very useful move in the English).
What do you recommend against 3...Bc5 as White? Should White move the knight away or wait for it to get kicked away?
Intresting line
Against 3. ... Bc5 you should play 4. e3 with the threat of d4 if needed. 4. b4 and 4. Nf3 have been played, too. For the 4. b4 line I suggest you look at what Aronian plays, he seems to be the only one who scores with it. With 4. Nf3 there is the annoying 4. ... e4, as the knight no longer guards the e4 square, 4. ... c6 5. Nc3 d6 is less problematic, there Black needs to first protect e5 and then develop the b8-knight to a less optimal square while White can develop rather naturally (even if White is moving the knight back and forth, Black isn't doing so useful moves either).
You should not move the knight on d5 before Black does something to attack it as it will not get trapped. If you instantly retreat it, Black gets to play Nc6 instead of having a pawn on that square.
There's this line:
Which will catch out uncareful players. It surprises me how often Black ends up willingly exchanging on c3. Then you can just take and develop.
By playing Nf3 first and then Nd5 you'll make Bc5 look more effective for Black has the advantage on d4, or so they think in this line. Also they won't play c6 on move four.
