This happened to me a couple of months ago on UA 900 (SFO-FRA). I tried to upgrade a B fare with 10K miles as a 1P and got an error. I called to find out what was going on and was told that the waitlist was closed as there were to many GS and 1K's already on the list for the number of seats available.

CSR said this doesn't happen often.

I'm a bit surprised that you wouldn't still be able to get on as a 1K. CSR didn't bother with me since I was 1P at the time.