It does sound to me as though the spirit of the EC is that you should be entitled to the refund. It sounds as though someone at the EC is being a bit 'jobs worth' about it all and isn't taking into account that if BA hadn't messed up you'd have been able to select your seats free of charge.

I've found in the past I've tended to elicit a better response from BA by writing, rather than EMailing. That might be worth a go ?

British Airways Executive Club
PO Box 111
Sudbury
Suffolk
CO10 6FB

BAH