Working Holiday Maker-Very Unusual Circumstances

[pcal85]

Hi All,
I was on a 2 yr working holidaymaker with 1 year work permit.From 29th Feb 08,working holidaymakers couldn't switch in the UK to any other category.The thing is i didn't know this and submitted my HSMP application 2 weeks later on the 12th March and found out 2days after sending.I called the HO to find out my options and the lady told me they cant do anything and i should wait n see as payment had been taken then.I subsequently received my reference no on 1st April and confirmed from them if my application was still valid.I called every 2weeks to check the validity of my application from then. My leave to remain was expiring on the 6th of June and i called on the 27th May to check my status as to know if i had the automatic extension as my application was with them.They confirmed it.On 14th July,i called them the lady checked the system n told me my application has being withdrawn bcos i sent after the deadline.i explained everything to her n she put me thru my case worker and the CW asked me to send in a fax detailing all the reasons.I did that n the application was processed.I got the decision on 27th August n i was refused and was told to reply within 28days if i have any new evidence bearing on this decision but then i should do that on the new PBS.i did submit the new application on 19th sept and got the a refusal decision on the 23rd Oct.Their reasons were flimsy n very appealable but they didnt give me any right of appeal saying that i didnt ve any leave to remain when i submitted the applic on the 19th sept.Dont know what to do as to request an appeal based on the circumstances as they made a mistake in accepting my initial application in the first place and consistently validated my application.Also uncertain as to this, affecting my immigration history bcos it will mean i will be an overstayer and will affect my future applications.Or should i just re-apply back home and how soon can i do dat?