This is absolutely NOT a "snafu" and the system worked exactly as it is supposed to. You were a standby passenger on a flight with no available coach seats. Therefore you were not on the flight and not eligible to be upgraded. Technically, if they were selling upgrades on that flight and there were confirmed non-status pax who could purchase upgrades, those pax could be sitting in F, then you'd end up in seat 38E that they vacated.

I've done Same Day Standby on "oversold" flights several times and have been thankful just to get on the plane. I can't tell you how many times I've called in to try to to a SDC, only to be told by SMS that I'm SOL, but I've decided to head to the airport anyway and, lo and behold, I'm able to board the aircraft. Sure, it may not be a great seat. Still, I got on.