The problem is that they don't see if it is a charge or a debit card even though it says "VISA" or "MasterCard" on the card and assume:

"not embossed" = "debit card"
"embossed" = "charge card"

It should not be a problem to put a authorization hold on a debit card as well... but authorization holds on debit cards usually expire pretty fast, typically during the next 8 business days which makes them useless for safeguarding e.g. a car rental.

I think somewhere it says that Sixt restricts debit card rentals to certain vehicle categories - the basic ones like ECAR, CCAR, ICAR, SCAR, FCAR, IFAR, and MVAR. But still, they should have given you the Polo for sure.

Anyway, if they really told you your card is worthless and cannot be used for anything... that is plainly wrong. Did they at least try to run your card and it was rejected from the system?