Last Friday, picking up pre-purchased tickets from a SWT TVM, the machine correctly vended all my tickets, but also vended a previous (and quite expensive) pre-purchased ticket (Super Off Peak single) belonging to someone else (which, naturally, I handed in at the ticket office in the hope that it might be reunited with its correct owner).
I carefully checked the 'hopper' before using it to ascertain that it was empty, so I can only assume that someone else had the same problem faced by the unfortunate OP. Indeed, I suspect that the OP's ticket may later have been vended to another passenger, and that the "proof" of printing provided by SWT was not sufficient proof that the ticket was correctly vended.
As an aside, it's a pity the OP didn't find this forum first; with assistance and advice, he might have had a better chance of:
1) wording his letter(s) so as to maximise of the chance of persuading SWT to agree to a mutually satisfactory outcome; failing that;
2) getting TF to intervene to put pressure on SWT to change their minds; failing that;
3) offering a sober assessment of the risks and probabilities of litigation, and, if necessary;
4) presenting the best possible case, both in his statement of claim, and in court, bearing in mind that the OP's witness statement and testimony are both evidence in their own right.
As it is though, the OP has my sympathy, but I'm not sure what he hopes to gain by re-opening the thread here. I continue to advise against appealing, on the grounds that the risk/ reward ratio is prohibitive, and in any case it sounds like the OP will not in fact appeal.