Sorry this is happening. This is true with a lot of stores though and you may be out of luck. You have to read the fine print of how to return what where, regardless what you may write on the outside of the box. I hope you have a happy outcome!
Starting Score: 648
Yes you are correct that many large retailers like Zappos, Amazon etc. do not put returns back into inventory and sell again regardless of condition on return. I guess I was having a moment of duh myself. I have returned many things purchased in store or online back to a store before via shipping but didn't really think about the .com return vs. store return.
But in the end I didn't think I would get "The item might have been thrown away since it's an item we don't have record of"
It is a $50 error, one of my cheaper errord over the years, but I do like to fight until the end 
Different topic thread, but did you know when you make a return to Zappos, it scans and credits the way you purchased and then moves over to the outlet side of Zappos and it gets opened... Someone I know said that they open boxes all the time that should have like a $3k pair of Dior Boots and inside the box will be a $20 old Nike Shoe... Not even a PAIR of Nike Shoes, Just 1. They will mark the account but they still issue the refund!!!
@Coldness Very true!!
@trumpet-205 wrote:It is true that Walmart retail store and Walmart.com are two separate companies. Same thing with Target, Sears, etc.
What you should have done is return both items in store. You need to print out the return form on Walmart.com then take it to the store.
I acutally did this first... However my closet store is in Crenshaw in LA and sorry to anyone that is from Crenshaw or lives in Crenshaw I don't mean to be mean but it's scary ghetto to me and I literraly went and stood in the line for over 30 minutes, it wrapped its way INTO THE MALL!! One girl was at the return desk and she currently needed a supervisor over ride, in the 30 minutes I stood, that supervisor NEVER CAME... Who did come, was security to stand and make sure the line didn't get crazy. I walked out and vowed to never return to the store and do everything online and I went home and called for pickup
so I will just go back to it's $50 that will most likely be a lesson to me and that will be it, but I'll try this dispute one more time.
@Creditaddict wrote:
Different topic thread, but did you know when you make a return to Zappos, it scans and credits the way you purchased and then moves over to the outlet side of Zappos and it gets opened... Someone I know said that they open boxes all the time that should have like a $3k pair of Dior Boots and inside the box will be a $20 old Nike Shoe... Not even a PAIR of Nike Shoes, Just 1. They will mark the account but they still issue the refund!!!
I guess it's not overly surprising considering Zappos is owned by Amazon and therefore part of a huge company that probably determined that it saves money by letting the occasional unscrupulous buyer pull off those kind of shenanigans than go through all the hassle of fighting with someone who would even attempt something like that in the first place. It's surprising though since it involves shoes, which I would assume can be resold as new, unlike many/most other consumer items.
On the other hand, some stores like Best Buy make sure that a returned item box actually contains the item it should, even if it means opening up a package that is still sealed. So when i returned a $600 tablet last year, unopened, they sliced it open just to make sure it had the tablet inside. Of course that means that they can't sell it as new anymore, but I guess they'd rather take that loss than let those kind of people get away with complete fraud like that.
Sadly, I'm betting Zappos will be getting a few more used, single Nikes in returned Jimmy Choo boxes (if they even sell high end shoes that is) after people read this...
but hey, who says I'm cynical? 
Btw, sorry to hear about your return troubles OP. Sucks when that happens. IME, it usually seems to be the other way around, that is, you can return online store purchased stuff to their brick n mortar shops but not usually the reverse.