From your post to the lurkers it seems you have in the meanwhile cancelled the entire ticket. At this point I wonder what you expect with regard to non-refundable upgrades/seat reservations? Before the case was muddy (and I was on your side), now LH clearly wins.
HTB.
Since LH could not correct the errors in their reservation system, I cancelled the ticket to start over. In my opinion, the problem started when a single segment was changed and somehow killed off everything and locked up the record.