You'll find lots of similar tales on the master Hilton Best Rate Guarantee thread:
Hilton Best Rate Guarantee or BRG
These programs are basically tools hotels groups use to keep their franchisees honest. Instead of having a company employee trying to make sure hotels main rate parity between the chain and online travel agencies (which is part of every franchise agreements I've ever heard of), they have customers do all the grunt work. That's the easiest way to find scofflaw hotels.
Now, my guess about your case is that the person who made the decision didn't read the web site correct. Or, they selected the wrong denial reason from the pre-determined list.