I understand LX's perspective - that they could only see a final destination of ZRH.
But surely Shengen immigration laws aren't written to specify how a person transits beyond where they can be and for how long.

Seems more likely that LX wrote policies that cover the 'normal' transit scenario, but that means they made certain assumptions.

If the actual immigration Shengen law doesn't specify the type of ticket necessary for transit, then LX should indeed be liable.