Yes, the auction is exactly as you described it.

Giving a full refund and "moving on" is a valid suggestion, for many there's not much point in hassling over a couple of bucks.

On the other hand, making this guy pay for his inability to read, and more importantly, letting him know that HE was the one at fault here is a good service for your fellow sellers, who might be his next victim if you just let him slide.

I've run across quite a few weird bidders who can't read, can't write, can't follow simple directions, can't tell the truth, and can't understand why I don't let them get away with all the crap that previous sellers have. I always wonder why they have perfect feedback ratings? I guess the previous sellers just bit the bullet and "moved on"?