Given your screen shots and your story, it looks to me like you have royally suffered at the hands of incompetent agents / computers.

Who is to blame? I am not sure on that one, it is yet another example of, when something goes wrong - VS blaming partner and partner blaming VS, which seems to be the standard nowadays.
One thing that may help your cause is to show to both sides the number of miles that were deducted from your account(s) for this booking. I am not too familiar with AF redemption rates, but if you can show that the number of points deducted and taxes / fees paid, was for the requisite Business Class seats, then that will surely show both sides that one of them is in the wrong - and will greatly help in future litigation, I would suggest.

Good luck

Nick