When you originally booked, you were happy to use a free night certificate for a 42k point room.

There was an issue with that stay, as a result of which, the hotel refunded you the points. You also got some benefit from the hotel room where you stayed before, even if it's just taking you a step closer to requalification.

Yes, you did give up something worth more than 42k points to stay there - and you could make the argument that you should have that higher-value thing (i.e., a free night cert) as the stay didn't meet expectations. However, you freely chose to give up the original free night cert for "only" 42k points, so I'd say you're ahead on the deal given the hotel's error. I would chalk this up as a win, overall.