there is a story just like yours on another forum, except for it's a girl who was on C-1. She got a denial from USCiS when she appied for AOS. She motioned to reopen. The interview is soon, however, the hubby can't make it to the interview, he is working on a cruise.
She also claims that she didn't look at her I-94, and that she was supposed to enter with B-1.