Yes but they are far from clear in explaining to OP "why" it's not eligible.

I've had a similar incident previously. They said my routing was ineligible because it was "booked as a stopover and not a transit". The period didn't exceed 24 hours, hence it couldn't have possibly been a stopover. And nowhere during the award booking process was any of the routings clearly designated as "stopover" versus "transit".

Finally it took a bit of sleuthing on my part as explained by KingCanute above to figure out why.

Hence better trained agents who can provide better explanations will help travellers from feeling confused and dissatisfied at the responses received.