Also if you find a bug feel free to post it, I will gladly admit if I am wrong and fix it.
I think I know what would have happened though.
As you can see in the pastebin the wallet was corrupted and the most recent backup they had was 8 days prior. When reverting to this backup the keypool was taken back to the previous state. This would allow addresses that had already been assigned to be reassigned.
Addresses should've been taken out from the key pool if they had been used in transaction, blockchain was synced, so queue shouldn't contain those addresses, at least in theory.
If synced on the right chain, you mean where the original transactions exist.
They didn't update. The key generation/keypool selection hasn't changed since this lineage of coins was forked from litecoin. This explains so many problems with C-CEX. They don't know what they are doing.