Not Happy Right Now ...

[Dean]

According to your statement, they're convinced they made a mistake by not cancelling the list.

Maybe, all we have is what was posted. However, I'll point out that DVC is good at making you feel good once something happens including accepting blame where blame may not exist. Based on the info provided I think this is one of those gray areas. You should have told them to cancel and they PROBABLY should have asked you once you made a subsequent reservation. The reality is the wait list is far from perfect and it's buyer beware to a large degree.