Very difficult to say one way or the other given the information in your posting; did you ask the crew on the flight what was wrong with the seat? Known defects are logged and if they can't be fixed before the next flight then the seat is blocked-off.

Whilst some defects render the seat unusable by anyone, others render it unacceptable for commercial-passenger use but may be released for staff passengers with eligible J/F standby tickets; seats suffering from IFE or electric power failure are sometimes released to staff with J/F eligibilty.

I don't want to speculate on what happened but this could be one possible reason why your preferred seat was apparently 'inop' yet nonetheless occupied.

Nothing wrong with chasing this up with the airline; you should always feel free to speak to the CSD on the day, they may have the answers too.